FTX Seeks $175M Settlement in Dispute with Genesis Entities

FTX and CEO John J. Ray III Seek $176 Million Settlement

Cryptocurrency exchange FTX and its CEO, John J. Ray III, have filed a motion to reach a settlement of $176 million with Genesis entities. The motion aims to resolve a disagreement between FTX Trading and related debtors and Genesis entities. The claims against FTX Trading and its affiliates total around $176 million and involve customer claims.

Creditors Express Discontent and Urge Contestation

Creditors of FTX have expressed their discontent with the proposed settlement and have urged the Official Committee of Unsecured Creditors of FTX to contest the agreement. They raise concerns about Alameda's transfer of significant FTX customer funds to Genesis in 2022 as part of their objection to the settlement.

Alameda Faces Avoidance and Loan Claims

Alameda, a party involved in the dispute, currently faces a $140 million avoidance claim and an outstanding loan claim of about $40 million. Claims under section 502(h) of the Bankruptcy Code also apply to permissible FTX claims.

FTX Argues for Settlement to Avoid Further Conflicts

FTX argues that the potential recoveries from Genesis debtors and related entities are unpredictable, making a settlement the best option to prevent additional conflicts. FTX's CEO, John J. Ray III, has submitted a supporting declaration for the motion, advocating for a settlement with Genesis and the associated remedies.

FTX 2.0 Coalition Expresses Concerns

The FTX 2.0 Coalition, an influential group within the cryptocurrency community, has expressed concerns about the proposed settlement. They highlight the ongoing DOJ probe into DCG and Genesis and claim that Genesis claims are currently worth more than FTX's, despite Alameda using billions of FTX customer funds to repay Genesis.

Anticipating Dissent and Objections

The coalition anticipates objections to the settlement from the Official Committee of Unsecured Creditors due to Alameda's use of FTX customer funds to repay Genesis. They argue that these funds rightfully belong to FTX customers.