Bankrupt
crypto exchange, FTX, and its debtors have proposed reducing the maximum settled value in
its proposed settlement with insolvent digital asset lender, Genesis, from $10
million to $7 million. The change followed opposition by the US Trustee to the $175 million
settlement agreement reached by both crypto firms.
Last week,
FTX filed a motion, seeking court approval for Genesis
to pay the settlement amount to Alameda Research, its affiliated but
equally bankrupt crypto hedge fund. The agreement represents a big compromise
for FTX which had earlier sought to recover nearly $4
billion in
transfers it allegedly made to the crypto lending firm between August 13 and November
11, 2022.
The deal
was supported by FTX’s Official Committee of Unsecured Creditors which explained that the settlement strikes an
appropriate balance between what may have been obtained through successful
litigation and the inherent risks and costs of proceeding (in an already
expensive case) with such litigation, and results in a net benefit for the FTX
Debtors’ estates.”
FTX asks court to settle Genesis dispute for a $175 million Genesis claim, the release of a $175 million customer claim and (near worthless) Alameda claims.
Down from first $3.9 billion to $2 billion asserted, this must be the worst deal to date, especially in light of the new… pic.twitter.com/ipxHuWMU4A
— FTX 2.0 Coalition (@AFTXcreditor) August 17, 2023
However,
FTX and its debtors in a court document filed on Sunday noted that the
US Trustee, which is the office in the US Department of Justice that oversees
the administration of bankruptcy cases, criticized the move. They argued
that the objection should be overruled and the motion granted.
“The US
Trustee—the sole objector to the Motion—seeks to inject itself into a
routine settlement process that is already adequately safeguarded by two
different creditor committees,” FTX explained.
Meanwhile,
in addition to the adjustment made to the maximum settled value, FTX and its
debtors in a bid to address the issues raised by the US Trustee in its
objection have proposed filing
monthly reports of executed settlements. They also want
to include US Trustee
as a third “noticed party” in the arrangement.
Finance
Magnates reported that FTX
and Genesis
before filing for bankruptcy…
