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A bankruptcy judge in New York has sanctioned a settlement between the insolvent cryptocurrency companies FTX and Genesis Global Trading (GGC), permitting FTX-affiliated Alameda Research to obtain $175 million from GGC.
The United States Bankruptcy Court for the Southern District of New York approved the settlement agreement involving FTX and GGC’s parent entity, Genesis Global Holdings, in a document filed on Oct. 11.
Following the approval, Genesis debtors are formally permitted to engage in and execute the settlement agreement, which includes the payment of $175 million to FTX.
In addition to endorsing the settlement amount, New York bankruptcy Judge Sean Lane has also dismissed several claims made by the FTX debtors against Genesis.
The filing indicates that the court has accepted the retraction of numerous claims, comprising three claims from FTX Trading, six claims from Alameda Research, and six claims from West Realm Shires Services, which represents FTX US.
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The ratified settlement signifies a considerable decrease from the total amount initially claimed by FTX debtors, who collectively asserted claims amounting to approximately $3.9 billion in May 2023. The claims from FTX included about $1.8 billion in loan repayments that Alameda allegedly made to GGC, as well as $1.6 billion in assets that Genesis debtors purportedly withdrew from FTX and other assets.
Genesis had previously stated that the settlement was “fair and equitable” and would enable the company to avoid engaging in “protracted litigation,” the results of which would be “inherently uncertain.” Conversely, FTX creditors expressed dissatisfaction with the settlement and urged the Official Committee of Unsecured Creditors of FTX to challenge the agreement in August 2023.
Related: Caroline Ellison provided 7 ‘alternative’ balance sheets hiding Alameda’s exposure to FTX
The FTX exchange collapsed in November 2022, instigating a significant contagion within the cryptocurrency sector. Crypto lending firm Genesis was among the numerous entities impacted by FTX’s downfall due to its exposure, with its derivatives business losing access to $175 million in crypto assets that were locked in an FTX trading account. After suspending withdrawals in November 2022, Genesis filed for bankruptcy in January 2023.
Genesis’ settlement with FTX occurs amid the ongoing trial of FTX founder Sam Bankman Fried, who faces 13 charges including fraud, money laundering, and bribery of officials.
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