Bankrupt FTX Sues Bankrupt Genesis To Recover $4 Billion It Doesn’t Have
As part of its efforts to recover value for creditors, cryptocurrency exchange FTX is attempting to recover about $4 billion from similarly insolvent crypto lender Genesis and a still-solvent British Virgin Islands-based firm.
Lawyers for FTX demanded $1.8 billion in loans and a $273 million collateral commitment allegedly issued to Genesis by FTX’s sister trading firm Alameda Research, in a May 3 court filing in a New York Bankruptcy Court.
FTX is also attempting to recoup $1.6 billion in alleged Genesis withdrawals and an additional $213 million allegedly removed from the exchange through its BVI-based business GGC International before it filed for Chapter 11 bankruptcy on November 11.
According to the petition, Genesis was “largely repaid” its almost $8 billion in loans to Alameda, “unlike other FTX creditors and customers.”
The bankrupt lender, according to FTX, was “one of the main feeder funds for FTX and instrumental to its fraudulent business model.”
Lawyers for the exchange are requesting the clawback under bankruptcy statutes that allow it to recoup “avoidable transfers” that occur within 90 days of a company declaring bankruptcy.
Previous FTX clawbacks have centered on $3.2 billion in compensation to former executives, a $460 million investment by Alameda in venture capital firm Modulo Capital, and approximately $93 million in political donations made by founder Sam Bankman-Fried and other former top commanders.
Genesis filed for Chapter 11 bankruptcy protection in New York earlier this year in January. It reported owing over $3.5 billion to its top 50 creditors.
According to a court filing in February, parent company Digital Currency Group intends to transfer Genesis Global Trading shares to Genesis Global Holdco in order to eventually sell both companies and repay clients.
Information for this briefing was found via Coin Telegraph and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
