FTX, the cryptocurrency exchange that declared bankruptcy in November 2022, has taken a significant step in its ongoing bankruptcy proceedings by filing a motion in a Delaware court to sell its $175 million claim against the also bankrupt digital financial services firm, Genesis Global Capital. This claim originates from FTX’s associated hedge fund, Alameda Research.
The motion, filed on February 1, outlines FTX’s strategy to potentially sell the claim either in whole or in parts and at various times to capitalize on optimal market conditions. Currently, claims against Genesis are trading at 65% of their face value, a figure notably higher than the 38% value at which Alameda Research’s claims are trading. This strategic move aims to maximize the return from the sale of these claims for FTX’s creditors and stakeholders.
FTX’s motion seeks the court’s approval for a sales procedure that would streamline the process, eliminating the need for separate motions for each sale. This procedure mandates that the sale price must be at least 95% of the highest price quoted by leading market-makers for general unsecured claims against Genesis Global Capital (GGC) within a three-day period leading up to the sale. This approach is designed to ensure that the sales are conducted efficiently and at prices that reflect the best possible return for FTX’s creditors.
The claim for $175 million was part of a larger dispute between FTX and Genesis, with FTX initially seeking to recover $3.9 billion under bankruptcy law. The $175 million claim was negotiated and approved by the court in October 2023, following discussions that began in August 2023. This settlement was reached under the premise that it would avoid prolonged and uncertain litigation, providing a more predictable outcome for both parties involved.
Genesis, a subsidiary of Digital Currency Group, filed for bankruptcy in January 2023 amid a complex legal battle with the Gemini cryptocurrency exchange over the Gemini Earn program. On the same day as FTX filed its motion, Genesis reached a $21 million settlement with the United States Securities and Exchange Commission (SEC) regarding the Gemini Earn program. This settlement and Genesis’s proposed bankruptcy reorganization plan are set to be reviewed in a New York court hearing on February 14.
This development is a critical juncture in the bankruptcy proceedings of two major players in the cryptocurrency industry, reflecting the intricate web of claims, settlements, and legal strategies that have emerged in the wake of the sector’s recent challenges. The outcome of FTX’s motion and the subsequent sales of the claim against Genesis will be closely watched by investors, regulators, and other stakeholders in the cryptocurrency and digital finance sectors.
Get $200 Free Bitcoins every hour! No Deposit No Credit Card required. Sign Up