Thursday’s documents cast a fog over bankrupt crypto lender Genesis Global Capital (GGC)‘s prospects to settle its affairs and start returning money to former customers. The lenders pointed their fingers at a proposed $175 million settlement with the fallen exchange, FTX, alleging that GGC had sought to color the bankruptcy process through calculated vote-buying.
These complaints create yet another bump for Genesis, which has been embroiled in a heated discussion about managing the over a billion dollars owed by its parent company, Digital Currency Group (DCG), ever since it filed bankruptcy in January.
Genesis and FTX’s bankruptcy terms detailed in a mid-August legal deal, gave FTX’s Alameda Research a $175 million claim on the Genesis estate, a stark drop from the $4 billion FTX formerly sought. However, not all creditors kissed goodbye to this pronounced drop in claim.
A late Thursday night filing by crypto exchange Gemini, which stands to lose some $766 million by Genesis, propped up accusations of an underhand plan to sway the voting process through FTX. Comments from a group of creditors, naming themselves the Fair Deal Group, poured fuel on the fire, labeling the proposal a move to purchase the support of FTX’s Debtors and their votes, hence skewing the bankruptcy process.
Genesis has meanwhile pinned its fate on its partnership with FTX, stating it could provide a smoother passage to reestablish the company without expensive litigation costs. Although the company did not provide an immediate response to these allegations, it seems to be hanging on by a thread.
On the other hand, an “ad hoc” group of creditors, who kept their identities under wraps but said they represent a majority of each class with $2.4 billion in claims, described FTX’s attempt to recover loans from what they called a “criminal enterprise” as alarming, even scornful.
Other creditors, including Gemini, have publicly expressed their disapproval of the DCG deal in the past, even taking steps to strip GGC of its monopoly rights to offer a wind-up plan. Gemini took even more drastic action in July when they called Genesis out on what they referred to as “fraud”, a claim DCG brushed aside as “defamatory” and a “publicity stunt”.
The ball is now in the court of Bankruptcy Judge Sean Lane who is expected to deliberate on the Genesis-FTX deal at a Sept. 6 hearing in the Southern District of New York. Without a doubt, this ruling will cast a long shadow over Genesis’s future and the future of creditor’s funds.
Source: Coindesk
