FTX Files Motion to Sell $175 Million Claim Against Genesis Global Capital
FTX has taken a significant legal step by filing a motion in a Delaware court to sell its $175 million claim against bankrupt Genesis Global Capital. This move is part of FTX’s strategy to manage its financial recovery after the collapse and aims to optimize returns from the claim amidst Genesis’s ongoing legal and financial challenges.
Proposed Sales Procedure to Maximize Value
The claims against Genesis are currently trading at 65% of their face value, higher than the 38% value of Alameda Research claims. FTX’s motion outlines a proposed sales procedure designed to ensure that the sale price is no less than 95% of the highest quoted price by leading market-makers for Genesis Global Capital’s general unsecured claims within a specified timeframe. This strategic decision aims to streamline the process and benefit all parties involved.
Background and Settlement with Genesis
FTX initially sought to recoup $3.9 billion from Genesis under bankruptcy law provisions but settled for $175 million in August 2023. This settlement extinguished other claims FTX had against Genesis, with both parties citing the desire to avoid lengthy litigation as a reason for the reduced claim amount.
FTX’s Collapse and Genesis’s Bankruptcy
FTX’s collapse in November 2022 due to accounting irregularities had an impact on Genesis Global Capital, which had $175 million tied up in FTX accounts at the time. Genesis filed for bankruptcy in January 2023 and faced legal entanglements with the Gemini cryptocurrency exchange. The recent $21 million settlement between Genesis and the SEC over issues related to Gemini Earn adds further complexity to its bankruptcy reorganization efforts.
Critical Court Hearing on February 14
A court hearing scheduled for February 14 in New York will consider the inclusion of the SEC settlement in Genesis’s proposed bankruptcy reorganization plan. This hearing will have significant implications for the cryptocurrency industry and the ongoing legal drama surrounding Genesis Global Capital’s bankruptcy.
Hot Take: FTX Takes Legal Action to Optimize Recovery from Genesis Global Capital’s Bankruptcy
FTX’s motion to sell its $175 million claim against bankrupt Genesis Global Capital is a strategic move to maximize returns and navigate its financial recovery post-collapse. By proposing a sales procedure that ensures minimum sale price conditions, FTX aims to streamline the process and benefit all stakeholders involved. The backdrop of FTX’s collapse and Genesis’s subsequent bankruptcy adds complexity to the situation, with a pivotal court hearing scheduled for February 14. This legal maneuver highlights FTX’s determination to recover and optimize its financial position amidst ongoing challenges in the cryptocurrency market.
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