Genesis, a bankrupt cryptocurrency lender, has requested approval from the court for a proposed settlement agreement with Three Arrows Capital (3AC), a crypto hedge fund that recently imploded.
The court filing on Nov. 9 states that Genesis is proposing 3AC to receive an allowed general unsecured claim against Genesis in the amount of $33 million. This amount represents 3.3% of the $1 billion in claims originally made against Genesis debtors.
The settlement agreement is designed to provide full and complete satisfaction of the $1 billion in claims made against the Genesis debtors. Genesis emphasized that 3AC’s $1 billion claims against Genesis were the largest asserted claims in Chapter 11 cases associated with the collapse of the FTX exchange. The 3AC debtor was also one of Genesis’s largest borrowers from 2020 to 2022, up until its collapse.
In addition to the monetary settlement, Genesis is also proposing to relinquish all of its claims and entitlements to AVAX and NEAR tokens in favor of the 3AC debtor. The proposed settlement also states that the bankrupt firms should drop any remaining liabilities and mutually release each other from liability, while the Genesis debtors retain and do not otherwise release any and all claims that they may have against DCG.
Genesis explained that the settlement is necessary to provide a smooth path for its Chapter 11 reorganization plans and to reduce potential risks and expenses from litigation. The proposed settlement agreement has been filed with the United States Bankruptcy Court for the Southern District of New York and requires Judge Sean Lane’s approval. Creditors have until Nov. 24 to object to the settlement, with a hearing scheduled for Nov. 30.
The proposed settlement comes on the one-year anniversary of the FTX exchange collapse, which sent shockwaves through the cryptocurrency industry and triggered a massive bear market. Genesis and 3AC are just a few of the many companies affected by the FTX failure due to their exposure to the collapsed platform. Genesis’s derivatives business, for example, lost access to $175 million locked on FTX.
The news of the proposed settlement with 3AC comes amid a tumultuous time for the cryptocurrency industry. The ongoing challenges and legal battles highlight the need for regulatory clarity and oversight within the industry to protect investors and companies alike.
In summary, Genesis is seeking approval for a settlement agreement with 3AC to resolve $1 billion in claims against the company. The proposed settlement aims to provide a smooth path for Genesis’s Chapter 11 reorganization plans and eliminate risks and expenses associated with protracted litigation. Despite the complexity and challenges, the cryptocurrency industry continues to evolve and adapt, albeit with occasional setbacks like the FTX collapse.