Bankrupt Genesis Capital has filed a proposed order to initiate an existing loan agreement with FTX. According to the order, FTX will receive a $175 million settlement from Genesis Global Capital.
Genesis Capital is a financial services firm that offers a range of services, including investment management, lending, and financial advisory services.
Genesis Capital provides funding for real estate investors, global asset management, financing solutions for truck buyers, and digital assets-focused financial services.
In January 2023, the company initiated the Chapter 11 bankruptcy protection process in New York, and according to the court filing, it estimated the assets and liabilities of the lenders to fall within the $1 billion to $10 billion range.
FTX collapse
FTX was a cryptocurrency exchange that allowed users to trade digital currencies for other digital currencies or traditional money, and vice versa.
It was founded in 2019 by Sam Bankman-Fried and Gary Wang and, at its peak in July 2021, had over one million users and was the third-largest cryptocurrency exchange by volume.
FTX offered a range of trading products, including derivatives, options, volatility products, and leveraged tokens.
However, in November 2022, FTX filed for bankruptcy protection in the US after a surge of customer withdrawals earlier in the month.
It was discovered that customer funds went to accounts controlled by Alameda Research, a cryptocurrency trading firm headquartered in Hong Kong, instead of FTX.
The collapse of FTX had a ripple effect on the cryptocurrency industry, with lenders such as BlockFi and Genesis announcing pauses in operations.
Court rulings on FTX
Amid the ongoing legal proceedings concerning FTX, a significant development occurred on October 6 when Judge Sean H. Lane approved the settlement designed to address the disputes between Genesis and FTX, a prominent cryptocurrency exchange.
Genesis’s crypto lending arm, Genesis Global Capital, had lent over $2.8 billion to Alameda Research, an affiliate of FTX. These loans and the disputes surrounding these funds have brought about a need to settle the score between the two firms.
However, the implication also means that FTX will drop its claim against Genesis, and any other suit, demanding over $1 billion in debts as the content of the order by Genesis reads “the Allowed Alameda Claim against GGC is hereby ALLOWED in the amount of $175 million.”
