Gemini

Order

United

FTX filed a motion in a Delaware court on Feb. 1 to sell its claim for $175 million against bankrupt digital financial services firm Genesis Global Capital. The claim was made by the bankrupt cryptocurrency exchange’s associated hedge fund, Alameda Research.
If approved, FTX may sell the claim in whole or in part and at different times to take advantage of the best conditions. Claims against Genesis are currently <a href="https://claims-market.com/pricing" target="_blank" rel="noopener nofollow">selling</a> for 65% of their face value, significantly higher than the 38% Alameda Research claims are fetching. 
The motion asks for approval of a sales procedure to apply to all sales to “alleviate the cost and delay of filing a separate motion for each proposed Sale.” The sale price must amount to at least 95% of the “the highest price quoted by one or more leading market-makers for general unsecured claims of GGC on a reference date” within three days of the sale date. The proposed sale order stated:
<blockquote data-ct-non-breakable="true">
 “Entry of this Order is in the best interests of the Debtors and their estates, creditors, interest holders and all other parties-in-interest.” 
</blockquote>
Objections to the sale of the claim can be made through Feb. 15.
FTX originally <a href="https://cointelegraph.com/news/ftx-seeks-to-claw-back-4b-from-genesis-in-a-battle-of-the-bankrupt">sought to claw back $3.9 billion</a> from Genesis in May 2023, as permitted under bankruptcy law. The claim for $175 million <a href="https://cointelegraph.com/news/ftx-seeks-175m-settlement-with-genesis-entities-to-resolve-dispute">was negotiated between FTX</a> and Genesis in August 2023 and <a href="https://cointelegraph.com/news/ftx-settlement-genesis-175-million-approved">approved by the court</a> in October. Other claims against Genesis by FTX were expunged at that time. 
Related: <a href="https://cointelegraph.com/news/ftx-repay-creditors-not-restart-exchange">FTX plans to fully repay customers but not restart exchange, says bankruptcy lawyer</a>
The sides justified the radically reduced sum by arguing that the potential for recoveries was unpredictable and the settlement avoided long and costly litigation, the outcome of which would also be unpredictable. 
<figure data-ct-non-breakable="true">
 <img src="https://s3.cointelegraph.com/uploads/2024-02/b56ba37a-aca7-4307-a9bb-d03eba1d8a63.png" alt="" title="">
 <figcaption style="text-align: center;">
 The FTX motion to sell its claim against Genesis. Source: Kroll
 </figcaption>
</figure>
FTX <a href="https://cointelegraph.com/news/ftx-collapse-the-crypto-industry-s-lehman-brothers-moment">collapsed in November 2022</a>&nbsp;after irregularities were uncovered in its account books. Genesis had $175 million tied up in its FTX account at that time, but it <a href="https://twitter.com/GenesisTrading/status/1590836594382032896?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1590836594382032896%7Ctwgr%5Ee2a26486567afa884e32a3ce2ccde78d497b22b5%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fcointelegraph.com%2Fnews%2Fthe-ftx-contagion-which-companies-were-affected-by-the-ftx-collapse" target="_blank" rel="noopener nofollow">said</a> that did not impact its market-making activities. 
Genesis, a subsidiary of the Digital Currency Group, <a href="https://cointelegraph.com/news/crypto-lender-genesis-files-for-bankruptcy">filed for bankruptcy in January 2023</a>, setting off a lengthy <a href="https://cointelegraph.com/news/gemini-and-genesis-legal-troubles-stand-to-shake-up-industry-further">conflict with the Gemini</a> cryptocurrency exchange. Genesis managed the Gemini Earn program, which was impacted when Genesis halted withdrawals. Genesis <a href="https://cointelegraph.com/news/genesis-settlement-sec-gemini-earn">reached a $21 million settlement</a> with the United States Securities and Exchange Commission regarding Gemini Earn on Feb. 1.
A court hearing will take place in New York on Feb. 14, where Genesis debtors’ proposed bankruptcy reorganization plan and the SEC settlement’s inclusion in it will be considered.
Magazine: <a href="https://cointelegraph.com/magazine/can-you-trust-crypto-exchanges-after-the-collapse-of-ftx/">Can you trust crypto exchanges after the collapse of FTX?</a>

FTX petitions court to sell off $175M claim against DCG’s Genesis

Cointelegraph

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