Court Approves Genesis and FTX $175 Million Settlement Deal Despite Outrage from Creditors
A United States court has approved the settlement terms of bankrupt digital asset lender, Genesis and FTX’s sister company, Alameda Research.
A Court filing on Oct 11 shows judicial accent cloaked the agreement which was entered by both companies in the course of the bankruptcy proceeding.
Per the agreement, Alameda Research will receive $175 million from Genesis Global, a deal described as “fair and equitable” as it would help save time and money spent on litigation; however, shareholders of FTX and other companies involved in the bankruptcy proceeding have lashed out against the deal.
As a result of the court’s decision, debtors can perform the terms of the settlement agreement as approved by New York Judge Sean Lane.
Several claims by creditors were expunged by the judge including six from Alameda Research, three from FTX trading, and an extra six from West Realm Shires Services, a representative of FTX US.
Both FTX and Genesis are in the middle of bankruptcies as investors seek to recover lost assets and restructure in the best possible method to protect some company assets.
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The recent settlement comes amid the ongoing trial of Sam Bankman-Fried, the embattled former CEO of FTX accused of diverting investor assets.
FTX creditors fire shot at the deal
FTX creditors have remained vocal against this deal because of the terms struck out from it. FTX creditors have demanded nearly $4 billion consisting of $1.6 billion in assets withdrawn by the crypto lender from FTX and a payment of $1.8 billion by FTX used to service loans.
In August, the agreed creditors moved under the Official Committee of Unsecured Creditors of FTX to oppose the deal it described as the worst deal to date because of the fall from $3.9 billion to $175 million.
“Genesis claims are currently worth more than FTX’s even as Genesis lender balances are inflated by the interest they earned from lending, among others, to Alameda.”
The company claims the funds rightfully belong to FTX shareholders and creditors but some crypto users raising eyebrows about the nature of the agreement.
FTX creditors are not alone
Other groups have also disassociated themselves from the deal vehemently opposing the same, describing it as a move to get FTX votes in the Genesis bankruptcy case.
Last month, Genesis creditors accused the company of plans to manipulate the voting process and cannot be accepted at face value, they argued in a court filing.
“[Genesis] proposed settlement with FTX is an attempt to manipulate the plan voting process… a sweetheart pre-plan deal.”
They claim that the company seeks the support of FTX and their votes which is a clear “perversion of the Chapter 11 process.”