Genesis Halts Withdrawals Amidst Legal Tussle with FTX
Genesis Global Trading (GGC) has come to an agreement with FTX. Consequently, Genesis is slated to pay a massive $175 million to FTX. This move follows a lawsuit where FTX, along with affiliate Alameda Research, demanded significant compensation from Genesis. Additionally, rumors are afloat that Genesis has temporarily stopped customer withdrawals within its lending branch.
Court Approves Genesis’s $175M FTX Settlement
On October 11, the United States Bankruptcy Court for the Southern District of New York gave its nod to the settlement. This decision permits GGC debtors to pay the $175 million to FTX, marking an important phase in the ongoing legal skirmish.
Genesis views this court-endorsed settlement as both “fair and equitable.” They hope to dodge the whirlwind of prolonged court battles, the outcomes of which are unknown. However, FTX’s creditors expressed their discontent. They’ve pushed the Official Committee of Unsecured Creditors of FTX to contest this accord.
Genesis Faces Fallout from FTX’s Downfall
GGC’s troubles began with the downfall of FTX in November 2022. The event sent shockwaves throughout the crypto sector. Significantly, Genesis, due to its financial ties with FTX, faced challenges. Its derivatives unit lost access to crypto assets totaling $175 million.
Moreover, Genesis halted withdrawals in November 2022. By January 2023, they had filed for bankruptcy. This legal stalemate with FTX is happening simultaneously with FTX founder Sam Bankman Fried’s trial. He’s dealing with serious accusations, including fraud, money laundering, and bribing officials.
Caroline Ellison, the former CEO of Alameda Research, made a critical courtroom disclosure. Under Bankman-Fried’s guidance, she prepared seven different balance sheets before meeting Genesis’s trading and lending co-head. This strategy aimed to hide massive loans on Alameda Research’s records, especially the astonishing $9.9 billion owed to FTX clientele.
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