A New York bankruptcy judge has approved a settlement between bankrupt cryptocurrency firms FTX and Genesis Global Trading (GGC), allowing FTX-affiliated Alameda Research to receive $175 million from GGC.
The U.S. Bankruptcy Court for the Southern District of New York gave the green light to the settlement agreement between FTX and GGC’s parent company Genesis Global Holdings in a filing on October 11th.
Upon approval, the Genesis Debtors are officially entitled to enter into the settlement agreement, perform it and pay $175 million to FTX.
In connection with approving the settlement amount, New York bankruptcy judge Sean Lane also dismissed several of the FTX debtors’ claims against Genesis.
According to the filing, the court accepted the withdrawal of a large number of claims, including three claims from FTX Trading, six claims from Alameda Research, and six claims from West Realm Shires Services, which represents FTX US.
The approved settlement represents a significant reduction in the amount initially sought by FTX debtors, who asserted a total of approximately $3.9 billion in claims as of May 2023. The FTX claims included approximately $1.8 billion in loan repayments that Alameda allegedly made to GGC and $1.6 billion in assets allegedly withdrawn from FTX and other assets by the Genesis debtors.
Genesis previously reportedly said the settlement was “fair and equitable” and would allow the company to avoid “protracted litigation,” the outcome of which would be “inherently uncertain.” On the other hand, FTX creditors expressed their dissatisfaction with the settlement and called on FTX’s official committee of unsecured creditors to challenge the settlement in August 2023.
Related: Caroline Ellison provided seven “alternative” balance sheets that hid Alameda’s involvement in FTX
The collapse of the FTX exchange in November 2022 triggered a massive contagion in the cryptocurrency industry. Crypto lending firm Genesis was one of many companies affected by FTX’s failure due to its exposure to FTX, as its derivatives business lost access to $175 million worth of crypto assets locked in an FTX trading account were. After stopping withdrawals in November 2022, Genesis filed for bankruptcy in January 2023.
Genesis’ settlement with FTX comes amid the ongoing trial of FTX founder Sam Bankman Fried, who faces 13 counts including fraud, money laundering and bribery of public officials.
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