- Bankrupt crypto companies FTX and Genesis Global Capital have reached an agreement over their $2 billion dispute
- FTX sought to reclaim almost $4 billion in Avoidance Actions in May
- The agreement should smooth the pair’s bankruptcy proceedings
Bankrupt crypto companies FTX and Genesis Global Capital have reached an in-principle agreement to resolve a contentious dispute stemming from their Chapter 11 cases. Lawyers for FTX Trading Ltd. and Genesis Global Holdco LLC wrote to a bankruptcy judge on Thursday to state that the two companies will settle their respective claims against each other, which had initially been valued at $3.9 billion. The agreement will come as a relief for Genesis creditors, who had feared that the issue would prolong bankruptcy proceedings and delay the eventual payout of claims.
FTX Sought Almost $4 Billion
FTX claimed in May that Genesis Global Capital owed it almost $4 billion related to dealings the pair had been engaged in since 2018, with FTX’s trading wing Alameda Research borrowing between $6.5 and $8 billion in total. FTX paid some of the money back, but its lawyers attempted to reclaim some of these repayments using bankruptcy laws following its collapse.
A figure of $3.9 billion was initially claimed by FTX, an assertion that Genesis vehemently rejected, and which was eventually halved to a maximum of $2 billion. Alameda Research repaid $1.8 billion in loans to Genesis and pledged an additional $273 million in the three months before FTX and its affiliates filed for bankruptcy in November. These loans were only 50% secured, leaving Genesis vulnerable. Genesis also withdrew $1.6 billion from FTX, and Genesis Global Capital International took out $213 million during the same period.
In May FTX lawyers attempted to use use ‘Avoidance Actions’ to recover funds received by Genesis and non-debtor affiliates, aiming to repay FTX’s creditors, who are owed over $11 billion.
Agreement Could Smooth Payouts
Following the behind-the-scenes agreement, the motions will now be filed with bankruptcy courts to seek approval for the settlement, with specific details not disclosed. The resolution of this dispute holds significant implications for both companies and could pave the way for a smoother resolution of their respective bankruptcy cases.
Not everyone is pleased with how FTX is handling its affairs, however, with criticisms over FTX lawyers’ astronomical fees growing:
#FTX has highest professional fees EVER!
FTX suits currently 2-4x more expensive than any large case in bankruptcy history.
More alarming, fees are growing exponentially, as they billed 2x monthly average in June 2023.
Paid from OUR ACCOUNTS!
— FTX Claims DAO (@FTXClaims) July 27, 2023