Court Petition: FTX Aims To Sell $175M Claim Against Genesis Trading, A Subsidiary Of DCG

On Feb. 1, FTX took action, filing a motion in a Delaware court to unload its $175 million claim against bankrupt Genesis Global Capital. This claim is linked to Alameda Research, the hedge fund of the collapsed cryptocurrency exchange.

Pending approval, FTX aims to sell the claim strategically, either in its entirety or in portions, seizing optimal market conditions. Genesis claims to command 65% of their face value, a notable increase compared to the 38% fetched by Alameda Research claims.

However, The request seeks approval for a sales process to cover all sales, cutting the expense and time of filing individual motions for each sale. However, the sale price should be at least 95% of the highest price quoted by top market-makers for GGC’s general unsecured claims within three days of the sale. 

The suggested sale order affirms: ‘Entering this Order benefits the Debtors, estates, creditors, interest holders, and all other parties.’

Raise any objections to selling the claim by Feb. 15. FTX initially aimed to recover $3.9 billion from Genesis in May, as allowed by bankruptcy law. FTX and Genesis negotiated a $175 million claim in August, which was court-approved in Oct. All other FTX claims against Genesis were dismissed then.

Troubles For FTX: Genesis Bankruptcy

Moreover, They justified the much lower amount by saying the chances of getting more money back were uncertain. Settling avoided a lengthy and expensive legal battle, which could have had an unpredictable result.

FTX Seeks Approval to Sell Claim Against Genesis – Source: Kroll

In Nov 2022, FTX crumbled after discovering irregularities in its account books. Genesis, with $175 million in its FTX account, asserted that it did not affect its market-making activities.

However, Genesis, part of Digital Currency Group (DCG), went bankrupt in Jan 2023. This led to a prolonged dispute with Gemini, the cryptocurrency exchange. Genesis ran the Gemini Earn program, and when withdrawals stopped, it caused issues. On Feb. 1, Genesis settled with the U.S. Securities and Exchange Commission for $21 million over the Gemini Earn matter.

On Feb. 14, a court proceeding is scheduled in New York to evaluate the Genesis Debtors’ proposed plan for bankruptcy reorganization, including the incorporation of the SEC settlement.

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