Genesis, FTX Strike Deal for $175M Bankruptcy Claim

FTX’s Alameda Research can make a claim worth $175 million from the estate of similarly bankrupt crypto company Genesis, according to a legal deal submitted in Wednesday court filings.

The deal, which also waives Genesis' parallel claims against FTX, represents a significant reduction from the nearly $4 billion FTX originally sought.

Lawyers hope it will help the companies wind up affairs and return funds to customers, after lender Genesis Global Capital filed for bankruptcy in January. Genesis and CoinDesk both belong to the Digital Currency Group.

“The settlement will, among other things, significantly smooth the path to confirmation of the Genesis Debtors’ chapter 11 plan of reorganization” without the cost of extended litigation, a court filing made by Genesis’ lawyers said.

In a parallel court filing, FTX’s Chief Executive Officer John J. Ray III agreed the deal was fair, saying it represented FTX’s best interests given legal uncertainties about the claims.

The crypto winter has seen the collapse of multiple crypto companies which often had complex financial interrelationships, which lawyers are now attempting to unpick in parallel bankruptcy proceedings.

FTX’s original claims against Genesis amounted to $3.88 billion, including loan repayments made by hedge fund arm Alameda Research and assets withdrawn by Genesis from the FTX exchange in the run up to its November bankruptcy.

In the other direction, Genesis Global Capital is FTX’s largest unsecured creditor, with court filings citing $226 million owed.

In July, lawyers announced they’d reached an agreement in principle but did not release full details. The deal has now been submitted to the judges administering each company for approval, with hearings set for September 6 and 13.