US Court Approves Settlement Terms for Genesis and Alameda Research
A United States court has given its approval to the settlement terms between bankrupt digital asset lender Genesis and Alameda Research, a sister company of FTX. The agreement was entered into by both parties during the bankruptcy proceedings. According to the terms of the settlement, Alameda Research will receive $175 million from Genesis Global. This deal is seen as fair and equitable, as it saves time and money that would have been spent on litigation. However, shareholders of FTX and other companies involved in the bankruptcy case have criticized the agreement.
The court’s decision allows debtors to fulfill the terms of the settlement agreement, which was approved by New York Judge Sean Lane. The judge also dismissed several claims made by creditors, including those from Alameda Research, FTX trading, and West Realm Shires Services.
Both FTX and Genesis are currently undergoing bankruptcies as they try to recover lost assets and restructure their operations to safeguard some company assets.
FTX Creditors Express Discontent with Settlement Deal
FTX creditors have been vocal in their opposition to the settlement deal due to certain terms that were excluded from it. They are demanding nearly $4 billion, consisting of $1.6 billion in assets withdrawn by the crypto lender from FTX and a payment of $1.8 billion by FTX for loan servicing.
In August, these creditors filed a motion under the Official Committee of Unsecured Creditors of FTX to oppose the deal, calling it the worst deal so far because it reduced the amount from $3.9 billion to $175 million.
“Genesis claims are currently worth more than FTX’s even as Genesis lender balances are inflated by the interest they earned from lending, among others, to Alameda.”
The creditors argue that the funds rightfully belong to FTX shareholders and creditors, and some crypto users are questioning the nature of the agreement.
Other Groups Also Oppose the Deal
Several other groups have distanced themselves from the settlement deal, vehemently opposing it. They claim that it is a ploy to secure FTX votes in the Genesis bankruptcy case. Last month, Genesis creditors accused the company of attempting to manipulate the voting process and argued that the proposed settlement with FTX is a “sweetheart pre-plan deal.”
“[Genesis] proposed settlement with FTX is an attempt to manipulate the plan voting process… a sweetheart pre-plan deal.”
These groups believe that Genesis is seeking support from FTX and their votes, which they consider a perversion of the Chapter 11 process.
Hot Take: Controversial Settlement Agreement Raises Concerns Among Creditors
The approved settlement terms between Genesis and Alameda Research have sparked discontent among FTX creditors. They argue that the excluded terms from the deal significantly reduce the amount they can recover. This has led to accusations of manipulation and a perversion of the bankruptcy process. The outcome of this dispute will have significant implications for all parties involved and may set a precedent for future crypto-related bankruptcies.
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