Genesis Global Trading (GGC) has been ordered to settle a hefty sum of $175 million to FTX. This directive stems from a lawsuit wherein FTX, alongside affiliated Alameda Research, claimed substantial financial restitution from Genesis.
Moreover, recent reports suggest that Genesis allegedly has paused customer withdrawals within its lending division. This revelation contributes further to the already turbulent scenario in the crypto market.
Genesis to Pay $175 Million to FTX
On October 11, the United States Bankruptcy Court for the Southern District of New York sanctioned the settlement between the embattled crypto firms FTX and GGC. This accord authorizes Genesis debtors to discharge the settlement amount of $175 million to FTX. Therefore marking a significant chapter in the ongoing legal tussle.
This court-approved settlement is perceived as “fair and equitable” by Genesis. It aims to circumvent the vortex of “protracted litigation” whose outcome remains “inherently uncertain.” Conversely, FTX creditors showcased displeasure, urging the Official Committee of Unsecured Creditors of FTX to challenge this agreement.
The backdrop of this legal drama traces back to the collapse of FTX in November 2022, which rippled a financial shockwave through the crypto industry. Genesis found itself ensnared due to its financial tethering to FTX. Its derivatives business lost access to crypto assets valued at $175 million.
Genesis’s financial quagmire led to a cessation of withdrawals in November 2022, followed by a bankruptcy filing in January 2023. This legal impasse with FTX is unfolding amid the ongoing trial of FTX founder Sam Bankman Fried, who faces grave charges, including fraud, money laundering, and bribing officials.
Former Alameda Research CEO Caroline Ellison recently testified about preparing seven distinct balance sheets under the directive of Bankman-Fried before a meeting with Genesis’s trading and lending co-head. This tactic aimed to conceal the enormous loans on Alameda Research’s balance sheets, particularly the staggering $9.9 billion owed to FTX customers.
This courtroom revelation highlighted the intricate financial web and the subsequent attempt to conceal Alameda Research’s actual fiscal standing from Genesis, which had significant entanglements with FTX.
This is a developing story…
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