Brace yourselves as the crypto universe witnesses an unprecedented episode of resolution. The bankruptcy specter, FTX Trading Ltd., and Genesis Global Holdco LLC have decided to bury the hatchet and find common ground to settle their Chapter 11 cases.
Out of chaos comes order
In the throes of financial collapse, FTX Trading had squared off with Genesis Global, claiming a staggering debt of $3.9 billion. The crypto lender, Genesis, countered this allegation, leading to a reduction of the contested amount to $2 billion.
A significant figure, no doubt, but one that both parties are now willing to negotiate. It’s important to note that the details of the proposed settlement are yet to be unveiled.
The two parties have committed to drafting motions for the bankruptcy courts to authorize this agreement.
The resolution could serve as a breath of fresh air for the creditors of Genesis who were bracing themselves for potential delays in bankruptcy proceedings and settlement of claims due to this discord.
The intricacies of the settlement
On the cusp of a new chapter, the counsels representing the bankrupt firms FTX and Genesis sent a letter on July 27 to Judge Sean Lane of the bankruptcy court stating their consensus on the settlement.
As they wade through the murky waters of bankruptcy and court supervision, both firms are striving to gather funds for their creditors.
The proposed agreement will seek to resolve the claims made by FTX against the debtors of Genesis and vice versa. Once the settlement has been documented, both parties plan to seek prompt court approval.
An earnest request has been made to the court to postpone the upcoming deadlines on current motions and due briefs, allowing adequate time to finalize the terms.
Not long ago, FTX claimed that Genesis, owned by the Digital Currency Group, owed them a whopping $4 billion. However, this sum was later reduced to $2 billion.
Genesis, a notable figure in the crypto world, filed for Chapter 11 bankruptcy protection following the collapse of crypto hedge fund Three Arrows Capital, earlier this year in a New York bankruptcy court.
A tale of bankruptcy and claims
FTX, which is also navigating its way through bankruptcy, asserted that Genesis owed it $3.9 billion. In light of this, US Bankruptcy Judge Sean Lane decided against opening the settlement talks to FTX.
Instead, Lane granted Genesis and its parent company Digital Currency Group, along with a group of its largest creditors, additional time to develop a revised payout proposal.
This proposed agreement would form the backbone of a Chapter 11 bankruptcy plan designed to pay hundreds of thousands of Genesis creditors. Notwithstanding the objections from FTX and a few Genesis customers, Lane upheld his decision.
Genesis, while denying any debt to FTX, proposed a long-term process to estimate the exact amount of the unliquidated claims. The fate of this process rests in the hands of Judge Lane who will deliberate on it in an upcoming hearing.
As it stands, the settlement between FTX and Genesis is likely to usher in a new era of resolution within the crypto industry, serving as a beacon of hope for entities entangled in similar financial predicaments.