FTX, Genesis Reach Bankruptcy Settlement

The bankrupt cryptocurrency exchange FTX and the bankrupt cryptocurrency lender Genesis have reached an agreement in principle to resolve FTX’s bankruptcy-related claims.

On July 27, legal counsel for both companies informed bankruptcy judge Sean Lane that a settlement had been reached. However, the agreement was only in principle and lacked specifics regarding the settlement.

Both companies are insolvent and have been attempting to collect funds for their creditors under court supervision. This agreement would satisfy FTX’s claims against Genesis’s creditors and vice versa.

“The Parties have reached an agreement in principle, subject to documentation, regarding a settlement that would resolve, among other things, the claims asserted by the FTX Debtors against the Debtors in these Chapter 11 Cases and the claims asserted by the Genesis Debtors against the FTX Debtors in the FTX Chapter 11 Cases.”

Additionally, it would withdraw pending motions associated with these claims. It is stated that both parties intend to document and obtain court approval of the settlement expeditiously.

They requested a postponement of forthcoming deadlines for pending motions and due briefs so that they could have more time to negotiate terms.

Snippet from the letter in Case No. 23-10063. Source: Kroll

FTX previously asserted that Genesis, which is owned by Digital Currency Group, owed the insolvent exchange up to $4 billion. According to a letter sent to Judge Lane earlier this month, the company reduced the amount to $2 billion.

In January, Genesis filed for Chapter 11 bankruptcy protection in a New York court following the failure of the crypto hedge fund Three Arrows Capital.

According to court documents, the crypto lender is the largest unsecured creditor of FTX and its affiliates, owing $226 million.

In June, FTX creditors objected to Genesis’ estimate that it was entitled to zero claims however, it appears that these claims and objections have been resolved with this latest development.