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FTX Exchange Objects to Prolonged Mediation Talks with Bankrupt Genesis – Here’s the Latest

Ruholamin Haqshanas
Last updated: | 2 min read
Image Source: Adobestock

FTX and its affiliates have objected to extending court-mediated settlement talks for bankrupt crypto lender Genesis. 

In a recent court filing, FTX said it had not been invited to a court-appointed mediation in May that involved Genesis, its parent company Digital Currency Group, and creditor Gemini Trust Co, despite being a major Genesis creditor.

The bankrupt crypto exchange also objected to a motion filed by Genesis Global that sought to estimate the FTX debtors’ claims at $0.00, claiming that it was the largest creditor in Genesis’ Chapter 11 proceedings with claims worth a whopping $3.9 billion.

On the other hand, Genesis argued that throwing out the FTX claims “is critical to avoid undue delay in the timing and amount of creditor distributions, and to expeditiously pursue confirmation of a Chapter 11 plan.”

FTX’s filing adds to more than a dozen other individual Genesis creditors who have filed objections to extend the mediation. 

A hearing on the extension is scheduled for Monday but these objections are delaying Genesis and its creditors’ attempts for a settlement.

Genesis, a firm that used to offer clients yield for lending out their digital coins, filed for bankruptcy in January following the credit crisis that hit the crypto industry.

The crypto lender’s inability to reach a final settlement with its creditors in February has resulted in months-long delays and pressure from individual creditors to resolve financial matters as soon as possible. 

“As a creditor who has diligently been following the proceeding, I, along with many others, have observed a concerning absence of substantial progress in resolving the financial matters at hand,” wrote creditor Yosif Sharif. 

“Without concrete actions or a genuine commitment to reaching a fair resolution, it is difficult to perceive this extension as anything more than a delay tactic.”

The proceedings have been further complicated by lawsuits and actions from the Securities and Exchange Commission, which sued the company over its customer lending program, Earn, which involved hundreds of thousands of Gemini’s customers seeking a return of around $900 million.

While the mediation talks held in May have been kept under wraps, Gemini has said that the exchange and two key creditors committees are working on “an amended plan of reorganization that could be advanced without DCG’s consensual participation should the mediation fail.”

Sam Bankman-Fried Aims to Blame Law Firm for FTX Collapse

Sam Bankman-Fried, the disgraced founder of cryptocurrency exchange FTX, is preparing to argue that he relied on the advice of Silicon Valley law firm Fenwick & West in his defense against fraud charges. 

Last week, his lawyers requested that prosecutors turn over documents that were provided to the government by the California-based firm between 2017 and 2022. 

Bankman-Fried’s defense team reportedly claimed the legal advice by Fenwick & West is “material to preparing a defense.” 

He allegedly plans to leverage a so-called advice-of-counsel defense, which could be used to rebut suggestions that Bankman-Fried intended to break the law. 

Prior to this, the disgraced crypto boss asked a New York federal judge to dismiss most of the criminal charges brought against him by federal prosecutors.