Genesis, a bankrupt crypto lender, has recently taken a decisive step in its Chapter 11 reorganization efforts. The company has approached the court with a proposal to settle its ongoing dispute with Three Arrows Capital (3AC), a collapsed crypto hedge fund, according to a November 9 court filing.
The proposed settlement marks a significant shift in the financial landscape between Genesis and 3AC. Under this agreement, 3AC’s unsecured general claim against Genesis will plummet from over $1 billion to $33 million. This drastic reduction is also complemented by Genesis’s relinquishment of claims to a substantial amount of digital assets, including Avalanche’s AVAX tokens and Near Protocol’s NEAR.
Additionally, the two bankrupt firms have mutually agreed to release each other from any remaining liabilities. This decision is a strategic retreat from prolonged legal entanglements, highlighting Genesis’s focus on restructuring its financial affairs.
The path to reorganization
Genesis has emphasized the necessity of this settlement to facilitate its reorganization plans under Chapter 11. By settling with 3AC, Genesis aims to eliminate the risks and expenses of extended litigation. The company views this agreement as vital to ensuring prompt distributions.
This development follows a series of significant financial resolutions for Genesis. Before this agreement, Genesis settled a substantial claim with the failed crypto exchange FTX for $175 million, Cryptopolitan reported. The lender also highlighted 3AC as one of its largest borrowers before its downfall.
Records show that 3AC had borrowed over $2 billion from Genesis between 2020 and 2022. Despite the foreclosure of its collateral last year, the hedge fund still owed approximately $1.2 billion in unsecured claims to Genesis. These figures underscore the magnitude of the financial entanglements Genesis is currently unraveling.
The settlement proposal is currently pending approval from Judge Sean Lane at the U.S. Bankruptcy Court for the Southern District of New York. While this agreement is a significant stride for Genesis, it is not yet set in stone. Other creditors, including Gemini, have until November 24 to object to this settlement. A hearing scheduled for November 30 will provide a platform for arguments against the settlement terms before implementation.
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