Genesis Bankruptcy Battle: FTX’s $3.9B Claim vs. Expedited Settlement – The High-Stakes Faceoff

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The recent court filing by FTX reveals that they have objected to extending court-mediated settlement talks for the bankrupt crypto lender Genesis. FTX claims that despite being a major Genesis creditor, they had not been invited to the court-appointed mediation in May, which involved Genesis, its parent company Digital Currency Group, and creditor Gemini Trust Co. The bankrupt crypto exchange also opposed a motion filed by Genesis Global that sought to estimate the FTX debtors’ claims at $0.00, asserting that it was the largest creditor in Genesis’ Chapter 11 proceedings with claims worth a whopping $3.9 billion.

On the flip side, Genesis argued that dismissing the FTX claims is crucial since it would prevent undue delays in creditor distributions, streamline the confirmation of a Chapter 11 plan, and expedite the pursuit of the same. The exchange’s filing adds to the mounting objections from other individual Genesis creditors, who wish to extend mediation. A hearing on the extension is scheduled for Monday, but these objections have caused delays for Genesis and its creditors in their quest for a settlement.

Genesis, a company that used to provide clients with yield for lending their digital coins, filed for bankruptcy in January following the credit crisis that impacted the crypto industry. Genesis has been unable to reach a final settlement with its creditors since February, resulting in long delays and mounting pressure from individual creditors to resolve financial matters as quickly as possible.

Creditor Yosif Sharif expressed his concerns about the lack of substantial progress in resolving the financial matters, stating, “Without concrete actions or a genuine commitment to reaching a fair resolution, it is difficult to perceive this extension as anything more than a delay tactic.”

The situation has become increasingly complex with the involvement of lawsuits and actions from the Securities and Exchange Commission, which sued Genesis over its customer lending program, Earn. This lawsuit involves hundreds of thousands of customers, who are seeking a return of approximately $900 million. Although the mediation talks held in May have been kept confidential, Gemini claims they are working on an amended plan of reorganization, which could be advanced without the participation of Digital Currency Group if the mediation fails.

Meanwhile, Sam Bankman-Fried, the disgraced founder of cryptocurrency exchange FTX, is preparing to defend himself against fraud charges by arguing that he relied on the legal advice of Silicon Valley law firm Fenwick & West. He is reportedly planning to leverage an advice-of-counsel defense, which could be used to counter claims that Bankman-Fried intended to break the law. Prior to this, the embattled crypto executive asked a New York federal judge to dismiss most of the criminal charges leveled against him by federal prosecutors.

Source: Cryptonews

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