Troubled cryptocurrency exchange FTX and its CEO have filed a motion seeking to reach a settlement of $176 million with Genesis entities.
As per a legal document, FTX Trading and related debtors have formally requested a court mandate to resolve their disagreement with Genesis entities, aiming to settle claims amounting to nearly $176 million. The claims put forth by Genesis entities involve around $176 million in customer claims against FTX Trading and its affiliates.
However, FTX creditors have expressed discontent and are urging the Official Committee of Unsecured Creditors of FTX (UCC) to contest the agreement. They point to Alameda’s transfer of significant FTX customer funds to Genesis in 2022 as a concern.
FTX asks court to settle Genesis dispute for a $175 million Genesis claim, the release of a $175 million customer claim and (near worthless) Alameda claims.— FTX 2.0 Coalition (@AFTXcreditor) August 17, 2023
Down from first $3.9 billion to $2 billion asserted, this must be the worst deal to date, especially in light of the new… pic.twitter.com/ipxHuWMU4A
Alameda currently faces a $140 million avoidance claim, along with an outstanding loan claim of about $40 million. Additionally, claims under section 502(h) of the Bankruptcy Code apply to permissible FTX claims.
FTX argues that the potential recoveries from Genesis debtors and related entities are unpredictable, making a settlement the optimal means to forestall additional conflicts. Furthermore, FTX CEO John Ray III submitted a supporting declaration for the motion, advocating for a settlement with Genesis and the associated remedies.
On August 17, the FTX 2.0 Coalition expressed on X (previously referred to as Twitter) that this arrangement from FTX is highly unfavorable, particularly in light of the ongoing DOJ probe into DCG and Genesis. In the post it said,
“Genesis claims are currently worth more than FTX’s even as Genesis lender balances are inflated by the interest they earned from lending, among others, to Alameda.”
Anticipating the UCC’s dissent, the coalition foresees objections to the settlement due to the fact that “Alameda used billions of FTX customer funds in 2022 to repay Genesis,” funds it says rightfully belong to FTX customers.