Genesis Reaches $1 Billion Settlement with 3AC
Bankrupt crypto lender Genesis, a subsidiary of Digital Currency Group, has settled $1 billion in claims filed by the now-defunct crypto hedge fund Three Arrows Capital (3AC). The settlement follows extensive negotiations and results in an agreement where 3AC will receive a $33 million allowed general unsecured claim against Genesis.
Genesis Requests Lower 3AC Claim in Settlement
The official document revealed that both parties have mutually released each other from liability, with Genesis debtors retaining any claims against DCG. The proposed settlement also aims to facilitate the confirmation of their Chapter 11 plan of reorganization, expediting distributions under the plan while reducing risks, expenses, and uncertainty associated with prolonged litigation.
The Genesis debtors assert that the settlement is fair, equitable, reasonable, and in the best interests of their estates and creditors. The motion seeks court approval for the benefit of all stakeholders involved.
“Entry into the Settlement Agreement is an exercise of the sound business judgment of the Genesis Debtors and has been approved by the Special Committee of the Board of Directors of Holdco, which, following consultation with the Debtors’ legal and financial advisors, has considered the risks associated with litigation of the 3AC Claims and has concluded that the Settlement Agreement is in the best interests of the Genesis Debtors’ estates and their creditors.”
1st Anniversary of FTX’s Collapse
The announcement coincides with the one-year mark of the FTX exchange’s collapse, which triggered a massive downturn in the industry. Genesis is one of many companies impacted by the FTX failure, facing a loss of access to $175 million locked on FTX.
Despite FTX making headlines for a potential revival that boosted its native token FTT, founder Sam Bankman-Fried faced a bleak outcome. He was convicted on all seven charges, including wire fraud, securities fraud, and money laundering conspiracy.
Hot Take: The Impact on Crypto Industry
The settlement between Genesis and 3AC marks an important development in resolving significant claims in Chapter 11 cases linked to the FTX collapse. It highlights efforts to streamline processes and minimize uncertainties through negotiated settlements. As these cases continue to unfold, it underscores the challenges faced by various companies affected by industry disruptions. The implications are far-reaching as stakeholders navigate legal and financial complexities within the crypto space.
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