FTX Seeks $176 Million Settlement with Genesis Amidst Dispute

The troubled cryptocurrency exchange FTX and its CEO, John J. Ray III, have filed a motion with Genesis entities seeking a $176 million settlement.

According to a legal document, FTX Trading and affiliated debtors have formally requested a court order to settle claims totaling nearly $176 million with Genesis entities.

Approximately $176 million in client claims are asserted by Genesis entities against FTX Trading and its affiliates.

However, FTX creditors have voiced their displeasure and urged the Official Committee of Unsecured Creditors of FTX (UCC) to contest the agreement.

They are concerned about Alameda’s transfer of substantial FTX customer funds to Genesis in 2022. Alameda is currently confronted with a $140 million avoidance claim and a $40 million loan claim.

In addition, Section 502(h) of the Bankruptcy Code applies to allowable FTX Claims.

FTX contends that the potential recoveries from Genesis debtors and related entities are speculative, making a settlement the most effective method for preventing further conflicts.

In addition, FTX’s chief executive officer, John Ray III, submitted a declaration in support of the motion, arguing for a settlement with Genesis and the associated remedies.

The FTX 2.0 Coalition stated on X (previously known as Twitter) on August 17 that this arrangement from FTX is extremely unfavorable, especially in light of the ongoing DOJ investigation into DCG and Genesis.

“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.”

In the post, it was stated that the coalition anticipates objections to the settlement because “Alameda used billions of FTX customer funds in 2022 to repay Genesis,” which pertains to FTX customers.