- FTX and Genesis are bankrupt and have been trying to collect funds for creditors under court supervision.
- The agreement will resolve FTX’s claims against Genesis debtors and vice versa.
- Genesis is the largest unsecured creditor of FTX.
Defunct cryptocurrency exchange FTX has reached an in-principle agreement with the bankrupt cryptocurrency lender Genesis. Legal representatives from both companies informed bankruptcy judge Sean Lane in a letter dated July 27 that a deal had been reached.
Both businesses are in bankruptcy and have been working to recoup money for creditors while being watched over by the court.
The agreement would put an end to FTX’s claims against the debtors of Genesis and vice versa. Additionally, it would rescind any ongoing motions pertaining to such claims. It was said that both sides intended to swiftly document and request court approval of the settlement.
The in-principle agreements stated:
“The Parties have reached an agreement in principle, subject to documentation, regarding a settlement that would resolve, among other things, the claims asserted by the FTX Debtors against the Debtors in these Chapter 11 Cases and the claims asserted by the Genesis Debtors against the FTX Debtors in the FTX Chapter 11 Cases.”
What was the issue between Genesis and FTX?
FTX previously asserted that Genesis, which is controlled by Digital Currency Group, owed the exchange up to $4 billion. However, in a letter earlier this month to Judge Lane, the exchange reportedly decreased the sum to $2 billion.
Genesis filed for Chapter 11 bankruptcy protection in a New York bankruptcy court in January following the failure of cryptocurrency hedge fund Three Arrows Capital. According to court documents, the crypto lender owes FTX and its affiliates $226 million, making it the largest unsecured creditor.
Genesis estimated that it was entitled to claims totalling zero in June; but, with this most recent development, it appears that FTX debtors’ claims and objections have been resolved. This also comes amid speculations of FTX resuming operations in the near future.