Feuding Bankrupt Crypto Firms Genesis And FTX Reach In Principle Agreement

Republished By Plato

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Disgraced crypto exchange FTX and lender Genesis–both of which filed for Chapter 11 bankruptcy at the start of November–have reached an agreement in principle to settle their ongoing multibillion-dollar dispute, according to a letter filed yesterday with the United States Bankruptcy Court for the Southern District of New York.

FTX, which began bankruptcy proceedings last November, filed a motion in May this year “to claw back funds received by Genesis and non-debtor affiliates” to help pay back its long line of creditors.

The motion went as far as calling Genesis—which filed for bankruptcy in January due to knock-on effects from the FTX collapse—“one of the main feeder funds and instrumental to [the] fraudulent business model” of FTX and its sister company Alameda Research.

It further claimed Genesis received “avoidable transfers” from FTX’s debtors totaling almost $3.9 billion.

Genesis denied owing FTX anything and in June filed its own motion asking U.S. Bankruptcy Judge Sean Lane to estimate its debt to FTX as zero.

A subsequent letter to Lane from FTX earlier this month showed the exchange reduced its claim to $2 billion.

There are few specific details in the letter other than informing the Judge that “the Parties have reached an agreement in principle, subject to documentation, regarding a settlement that would resolve, among other things, the claims asserted by the FTX Debtors against the Debtors in these Chapter 11 Cases and the claims asserted by the Genesis Debtors against the FTX Debtors in the FTX Chapter 11 Cases”

Neither FTX nor Genesis responded immediately to Decrypt‘s request for comment.

Genesis vs. Gemini

FTX isn’t the only exchange taking aim at Genesis. In January, the crypto lender found itself in another high-profile spat with Gemini, an exchange that isn’t bankrupt.

At the time, Gemini claimed that Genesis owed users of the exchange’s yield-bearing Earn service $900 million after they were unable to withdraw their funds following FTX’s collapse.

Gemini co-founder Cameron Winklevoss took to Twitter in a series of open letters and tweets directed at Genesis parent company DCG’s CEO Barry Silbert.

Winklevoss tweeted an open letter on July 4 warning Silbert that a failure to negotiate by that Friday would result in a lawsuit.

In an immediate follow-up tweet, Winklevoss tabled a “best and final offer” including a plan for $1.465 billion in forbearance payments and fresh loans denominated in USD, Bitcoin (BTC), and Ethereum (ETH).

Silbert didn’t reply and, true to his word, Winklevoss slapped him with a lawsuit four days later.