FTX has filed a motion in the Delaware court to sell a $175 million claim against bankrupt Genesis Global Capital, with the aim of maximizing returns from the sale. This move is part of FTX’s broader strategy to manage its financial recovery following the collapse, with the proposed sale process designed to ensure maximum value from the claim amid Genesis’ ongoing legal and financial challenges.
FTX has initiated a major legal maneuver by filing a motion in a Delaware court to sell its $175 million claim against Genesis Global Capital. This action comes in the wake of Genesis Global Capital’s bankruptcy declaration, which directly affects FTX and its associated hedge fund, Alameda Research. The claim, originally filed by Alameda Research, is part of FTX’s broader strategy to navigate the post-collapse financial recovery. FTX’s move to sell all or part of the claim and possibly at different times aims to optimize market conditions to maximize returns from the sale.
The claims against Genesis currently trade at 65% of their face value, a figure significantly higher than the 38% value attributed to Alameda Research’s claims. FTX’s motion outlines a proposed sale procedure designed to streamline the process and ensure that the sale price is not less than 95% of the highest price quoted by leading market makers for Genesis Global Capital’s general unsecured claims within a specified time frame around the date of sale. This strategic decision underlines FTX’s intention to alleviate the financial complexities and delays typically associated with the sale of such claims, emphasizing the rationale of the motion as being in the best interests of all parties involved, including debtors, creditors and other stakeholders.
The background to this motion is FTX’s initial attempt to recover $3.9 billion from Genesis under the provisions of the Bankruptcy Code, an amount that was later negotiated to $175 million in a settlement agreed in August 2023 between the reached two entities and was approved by the court in October 2023. the same year. This settlement effectively ended other claims FTX had against Genesis, with both parties citing the unpredictable nature of potential recoveries and the desire to avoid lengthy and costly litigation as primary reasons for the lower claim amount.
This development is part of a larger story involving the collapse of FTX in November 2022 due to accounting irregularities, which sent shockwaves through the cryptocurrency market. Genesis Global Capital, which had $175 million in FTX accounts at the time, insisted this had no impact on its market-making activities. However, Genesis’ own bankruptcy filing in January 2023 and subsequent legal entanglements, particularly with the Gemini cryptocurrency exchange through the Gemini Earn program, further complicates the situation. Genesis’ recent $21 million settlement with the SEC over issues related to Gemini Earn is a critical element in its ongoing bankruptcy restructuring efforts.
A court hearing scheduled for February 14 in New York will be a pivotal moment as it will consider the inclusion of the SEC settlement in Genesis’ proposed bankruptcy reorganization plan. This hearing represents an important step in the unfolding legal drama surrounding the bankruptcy of Genesis Global Capital and its broader implications for the cryptocurrency industry.
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