A New York bankruptcy judge has authorized a settlement between bankrupt crypto firms FTX and Genesis Global Trading (GGC), allowing FTX-affiliated Alameda Research to receive $175 million from GGC.
In a filing on October 11, the United States Bankruptcy Court for the Southern District of New York approved the settlement agreement between FTX and GGC’s parent company, Genesis Global Holdings.
After approval, Genesis debtors are officially authorized to enter into the settlement agreement, fulfill its terms, and pay FTX $175 million.
In addition to authorizing the settlement amount, New York bankruptcy judge Sean Lane has dismissed several FTX creditors’ claims against Genesis.
The court has accepted the renunciation of many claims, including three claims by FTX Trading, six by Alameda Research, and six by West Realm Shires Services, which represents FTX US, according to the filing.
The approved settlement represents a significant reduction from the amount originally claimed by FTX debtors, who collectively asserted claims totaling around $3.9 billion in May 2023.
The FTX claims included approximately $1.8 billion in loan repayments allegedly made by Alameda to GGC, $1.6 billion in assets reportedly withdrawn from FTX by Genesis debtors and other assets.
Genesis reportedly stated that the settlement was “fair and equitable” and would enable the company to avoid “protracted litigation,” whose outcome would be “inherently uncertain.”
Creditors of FTX, on the other hand, were dissatisfied with the resolution and urged the Official Committee of Unsecured Creditors of FTX to challenge the agreement in August 2023.
In November 2022, the FTX exchange failed, triggering a widespread epidemic in the cryptocurrency industry. Genesis was one of many companies impacted by the failure of FTX due to its exposure to the exchange, as its derivatives business lost access to $175 million worth of crypto assets stored away in an FTX trading account. Genesis filed for bankruptcy in January 2023 after stopping withdrawals in November 2022.
The settlement between Genesis and FTX comes during the trial of FTX founder Sam Bankman Fried, who faces 13 charges, including fraud, money laundering, and bribery of public officials.
