Judge Approves $175 Million Settlement Between FTX, Genesis

A New York bankruptcy judge has approved the settlement between the insolvent cryptocurrency firms FTX and Genesis Global Trading (GGC), allowing FTX-affiliated Alameda Research to receive $175 million from GGC.

In a filing dated 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 also dismissed several claims made by FTX creditors against Genesis.

The court has accepted the renunciation of a large number of claims, including three claims by FTX Trading, six claims by Alameda Research, and six claims by West Realm Shires Services, which represents FTX US, according to the filing.

The approved settlement represents a significant decrease from the amount that FTX debtors initially claimed, who in May 2023 asserted claims totaling roughly $3.9 billion.

The FTX claims included approximately $1.8 billion in loan repayments allegedly made by Alameda to GGC, $1.6 billion in assets allegedly withdrawn from FTX by Genesis debtors, and other assets.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.

Due to its exposure to FTX, crypto lending company Genesis suffered as a result of FTX’s failure because its derivatives business lost access to $175 million worth of crypto assets kept in an FTX trading account.

After ceasing withdrawals in November 2022, Genesis filed for bankruptcy the following year.

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.