Alameda Research, a subsidiary of FTX, will receive $175 million from GGC as the US Bankruptcy Court for the Southern District of New York upheld the settlement agreement between the exchange and Genesis Global Holdco.
The news comes amid the Sam Bankman-Fried trial, which exposed the inner workings of both FTX and Alameda, including financial malpractices and misuse of client funds. It is noteworthy that he faces 13 charges, including fraud, money laundering, and bribery of officials.
Genesis pays $175 million to FTX
The debtors have now been officially formed authorized To enter into a settlement agreement and pay $175 million to FTX. In addition, New York Bankruptcy Judge Shawn Lane dismissed several claims filed by FTX’s debtors against Genesis. The court accepted the withdrawal of several claims, including three from FTX Trading, six from Alameda Research, and six from West Realm Shires Services, which represents FTX US.
The approved settlement represents a significant decrease from the amount originally claimed of approximately $3.9 billion by FTX’s debtors in May 2023. These claims included approximately $1.8 billion in alleged loan repayments from Alameda to GGC and $1.6 billion in assets Allegedly withdrawn by Genesis debtors from FTX. Among other assets.
Genesis had previously said the settlement was considered “fair and equitable” and would allow the company to avoid engaging in “protracted litigation,” the outcome of which would be “inherently uncertain.” FTX’s official committee of unsecured creditors was advised to challenge the settlement in August 2023 after several of FTX’s creditors expressed dissatisfaction with the deal.
The collapse of FTX created a ripple effect
The collapse of the FTX exchange in November 2022 had widespread repercussions across the cryptocurrency industry. Genesis, a cryptocurrency lending company, was among the companies severely affected by the FTX failure, with its derivatives business losing access to approximately $175 million in cryptocurrency assets held in an FTX trading account. After suspending withdrawals in November 2022, Genesis declared bankruptcy in January 2023.
Meanwhile, FTX’s debtors published their first report detailing the management team’s missteps before the bankruptcy on April 9, 2023. According to the report, FTX Group lacks proper organizational structure, management and governance. The findings included security flaws, such as private keys for transferring cryptocurrency assets being left in often unencrypted files and hot wallets with unprotected internet access.
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