FTX and Genesis reach agreement for $175 million payment to Alameda

FTX and Genesis reached a deal on Thursday to have Genesis pay $175 million to Alameda Research, which the lending firm says will “smooth the path” to confirming its bankruptcy plan. 

“The settlement will, among other things, significantly smooth the path to confirmation of the Genesis Debtors’ chapter 11 plan of reorganization (the “Genesis Plan”), as well as eliminating the risks, expenses, and uncertainty associated with protracted litigation among the FTX Debtors, the Genesis Debtors, and GGCI,” Genesis lawyers said in a court filing. 

Genesis also agreed to waive all other claims against FTX, according to the filing. 

FTX originally filed the claim in May, which amounted to almost $4 billion. Genesis too had asserted claims against FTX, including $176 million in customer claims, according to the filing. 

Genesis filed for bankruptcy after taking a financial hit following the collapse of FTX last year. Genesis Global Trading said its derivatives business had $175 million stuck in the bankrupt exchange. FTX and Genesis were intertwined, with both providing loans to the other. 

The terms

“The terms of the Settlement Agreement provide significant and near-term benefits to the Genesis Debtors and their creditors, in contrast to the uncertainty and expense of fulsome litigation of the FTX Claims and Genesis Claims,” Derar Islim, interim Genesis CEO, said in a filing. 

The agreement will resolve all claims by FTX against Genesis “at a fraction of their face value,” Islim said. The agreement also eliminates the need for Genesis debtors to litigate their claims in the FTX bankruptcy proceedings, Islim said. 

“While the Genesis Debtors believe that their claims have significant value, they also implicate complex factual situations that make an ultimate, litigated outcome uncertain,” Islim said. “Regardless, the Genesis Claims are unsecured, and any recovery would likely occur in the distant future, if at all.”