The United States Bankruptcy Judge Sean Lane has allowed bankrupt crypto lender Genesis more time to submit its suggestions for a payout proposal. And FTX has been told it cannot participate in mediation talks.
After a series of bankruptcies last year, the firms are battling among themselves for the clawback of funds. FTX claims that Genesis owes it $3.9 billion, while the latter has denied the claims.
Genesis Allowed to Maintain Silence
According to Bloomberg, FTX and around 24 other creditors mailed Judge Lane requesting to end the settlement talks and order Genesis to pay back funds to creditors. But the judge denied the objections and said:
“There will be a certain amount of radio silence because mediation needs that to work. Shortening the mediation does not shorten the case.”
Moreover, the bankrupt FTX exchange wanted to join the mediation between Genesis and its parent Digital Currency Group (DCG.) But Judge Lean also denied FTX’s request.
FTX $3.9B Claim
After FTX’s bankruptcy last year, the team led by John J. Ray III has been trying to claw back funds from various debtors. Last month, BeInCrypto reported that FTX claimed $3.9 billion from the crypto lender Genesis. But, according to Genesis, it does not owe the amount to FTX.
Now, the crypto lender has been granted more time to assess the final payout to its creditors. According to a court filing, Genesis has a deadline of Aug. 2, 2023, to submit its recovery plan.
After the FTX collapse, Genesis paused withdrawals on Nov. 16, 2022, citing liquidity issues. It also took a major hit due to the collapse of the hedge fund Three Arrow Capital.
Read more about the FTX collapse and subsequent contagion here.
Lastly, on Jan. 19, 2023, Genesis filed for Chapter 11 bankruptcy.
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