FTX Seeks to Claw Back $3.9 Billion From Genesis – Coinpedia Fintech News
Troubled cryptocurrency exchange FTX is attempting to recover roughly $4 billion from Genesis, a bankrupt cryptocurrency lender, and a solvent entity in the British Virgin Islands. There will be a hearing on May 25 to discuss the motion.
Court documents filed on May 3 in a New York bankruptcy court indicate that FTX’s legal representatives are seeking the repayment of $1.8 billion in loans and $273 million in collateral. These funds were reportedly given to Genesis by Alameda Research, FTX’s sister trading firm.
Additionally, FTX is attempting to recover $1.6 billion in withdrawals that were allegedly made by Genesis, as well as $213 million that GGC International, the BV-based entity of the exchange, withdrew prior to its November 11 bankruptcy filing under Chapter 11.
A part of the filing reads, “The Avoidance Actions will seek to claw back funds received by Genesis and non-debtor affiliates so that these funds can be shared with all other creditors of the FTX Debtors in the FTX Chapter 11 Cases. These creditors include several million customers owed over $11 billion as of the time of filing of FTX Chapter 11 Cases.”
In January, Genesis Global Capital, which serves as the lending branch of Genesis, filed for bankruptcy. This filing was largely attributed to the financial fallout from FTX’s collapse. The bankruptcy declaration came after a public dispute that lasted for about a month between Digital Currency Group (DCG) and the Winklevoss twins.
Last year, FTX and its affiliated entities acquired token contracts that granted them the right to receive 888 million SUI tokens. At the time of acquisition, the value of each SUI token was $1.38, which would have resulted in a potential redemption value of $1.2 billion for the FTX group.
In March of this year, FTX opted to sell the token contracts and completed the sale on April 14th. However, FTX sold the contracts for only $1 million, which is roughly 1000 times less than the current redemption value of the tokens
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