FTX debtors object to Genesis’ ‘critical’ claims estimate of ‘$0.00’

Monday, 5 Jun 2023

Cointelegraph By Ciaran Lyons

Original Article

The FTX debtors alleged that the claim was filed “without any advance notice,” and they were not invited to participate in the mediation.


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Just a month after bankrupt cryptocurrency exchange FTX sought $4 billion from the also bankrupt crypto lender Genesis, it is now contesting a claim that it is entitled to nothing.

According to a June 2 court filing in the United States Bankruptcy Court for the Southern District of New York, FTX debtors have objected to Genesis’ estimation that they are entitled to claims totaling “$0.00,” which Genesis stated in an estimation procedures motion filed on June 1.

The FTX debtors alleged they were uninvolved in the mediation process and were not given “any advance notice” before the motion was filed.

FTX debtors even refuted a statement from Genesis suggesting they were kept informed throughout the proceedings:

“The FTX Debtors have not been invited to participate in the mediation despite the Genesis Debtors’ representation in the Estimation Procedures Motion that they are “working expeditiously with all parties in interest to formulate a plan structure.“

It was reiterated that the nil claim estimation, as outlined in the motion, was deemed “critical” by the Genesis debtors to prevent any delays and promptly move forward with the “confirmation of a Chapter 11 plan.”

June 2 court filing in the U.S. Bankruptcy Court for the Southern District of New York. Source: U.S. Bankruptcy Court.

The filing also argued that the FTX debtors “are by far the largest unsecured creditors in the Genesis Debtors’ Chapter 11 cases” and that it is crucial they participate in the mediation:

“The mediation is a waste of estate resources without the inclusion of the FTX Debtors and should not continue without the FTX Debtors’ involvement.”

As recently as May 3, lawyers for FTX were seeking almost $4 billion from Genesis, under bankruptcy laws allowing it to recoup “avoidable transfers” that occur in a 90-day period before a company declares bankruptcy.

FTX debtors have submitted a motion seeking relief from the stay — a request for the court to lift the automatic suspension on legal proceedings against Genesis — which is a standard procedure when a firm files for bankruptcy.

The motion is set to be heard by the court on June 15.

Related: SBF wants to subpoena documents from old FTX/Alameda law firm to use in his defense

This comes after Genesis’s parent company, the Digital Currency Group (DCG), conveyed it had no solution to its “outstanding intercompany obligations” that could help reimburse creditors.

During this period, DCG was engaged in a mediation period with Genesis in response to demands made by creditors.

In February, the firm had put forward a settlement plan, anticipating that Genesis creditors would receive an 80% recovery of funds after the company filed for Chapter 11 bankruptcy.

Magazine: Can you trust crypto exchanges after the collapse of FTX?


Cointelegraph By Ciaran Lyons

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