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The distressed cryptocurrency exchange FTX and its CEO have submitted a motion aiming to settle a dispute with Genesis entities for $176 million.
According to a legal filing, FTX Trading and its associated debtors have officially sought a court order to resolve their conflict with Genesis entities, with the goal of settling claims totaling approximately $176 million. The claims made by Genesis entities pertain to around $176 million in customer claims against FTX Trading and its subsidiaries.
Nevertheless, FTX creditors have voiced their dissatisfaction and are urging the Official Committee of Unsecured Creditors of FTX (UCC) to challenge the proposed agreement. They highlight Alameda’s transfer of substantial FTX customer funds to Genesis in 2022 as a point of concern.
FTX requests the court to resolve the Genesis dispute for a $175 million Genesis claim, the release of a $175 million customer claim, and (nearly worthless) Alameda claims.
Reduced from an initial $3.9 billion to $2 billion asserted, this may represent the least favorable deal to date, particularly considering the ongoing… pic.twitter.com/ipxHuWMU4A— FTX 2.0 Coalition (@AFTXcreditor) August 17, 2023
Alameda is currently facing a $140 million avoidance claim, in addition to an outstanding loan claim of approximately $40 million. Moreover, claims under section 502(h) of the Bankruptcy Code are applicable to allowable FTX claims.
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FTX contends that the potential recoveries from Genesis debtors and related entities are uncertain, making a settlement the most effective way to prevent further disputes. Additionally, FTX CEO John Ray III has provided a supporting declaration for the motion, endorsing a settlement with Genesis and the related remedies.
On August 17, the FTX 2.0 Coalition stated on X (formerly known as Twitter) that this proposal from FTX is significantly disadvantageous, especially in light of the ongoing DOJ investigation into DCG and Genesis. In their post, they remarked,
“Genesis claims are currently valued higher than FTX’s, even as Genesis lender balances are inflated by the interest they earned from lending, including to Alameda.”
Related: SBF jailed, FTX partners under attack: Law Decoded
Foreseeing the UCC’s opposition, the coalition anticipates objections to the settlement due to the fact that “Alameda utilized billions of FTX customer funds in 2022 to repay Genesis,” funds they assert rightfully belong to FTX customers.
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