FTX Challenges Genesis’ Zero Debt Claim

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Bank­rupt cryp­to exchange FTX has strong­ly refut­ed claims that Gen­e­sis owes it no money.

FTX claims that it is a major cred­i­tor of Gen­e­sis but was not invit­ed to a medi­a­tion ses­sion arranged by the court in May. Gen­e­sis alleged­ly hand­picked the par­tic­i­pants in the mediation.

In a court fil­ing pub­lished Fri­day, FTX indi­cat­ed it was sur­prised at Gen­e­sis’ unex­pect­ed move to declare FTX’s unre­solved claims worth­less. Gen­e­sis jus­ti­fied this action as nec­es­sary to quick­ly move for­ward with the con­fir­ma­tion of a Chap­ter 11 plan.

Ear­li­er in May, FTX said it is owed $3.9 bil­lion in cash and cryp­tocur­ren­cy from Gen­e­sis. “Gen­e­sis was one of the main feed­er funds for FTX and instru­men­tal to its fraud­u­lent busi­ness mod­el,” attor­neys for FTX wrote.

But Gen­e­sis argued that pur­su­ing FTX’s claims through the reg­u­lar legal process would cause unnec­es­sary delays in man­ag­ing its admin­is­tra­tive process. Gen­e­sis added that it aims to final­ize a plan by August, before its request­ed extend­ed exclu­sive peri­od ends.

FTX has joined a group of oth­er Gen­e­sis cred­i­tors who have sub­mit­ted objec­tions to extend­ing the medi­a­tion process. These objec­tions fur­ther com­pli­cate set­tle­ment dis­cus­sions between Gen­e­sis, par­ent com­pa­ny Dig­i­tal Cur­ren­cy Group and its oth­er creditors.

This devel­op­ment fol­lows DCG’s recent fail­ure to ful­fill a $630 mil­lion pay­ment owed to Genesis.

Gen­e­sis wants to extend the dis­cus­sions until June 16, and there will be a hear­ing on Mon­day to decide on this extension. 

Gen­e­sis, which used to give clients inter­est for lend­ing their dig­i­tal coins, stopped allow­ing with­drawals in Novem­ber, part­ly due to its con­nec­tion to FTX’s bank­rupt­cy. It then filed for bank­rupt­cy in Jan­u­ary and has been try­ing to reach a set­tle­ment with its cred­i­tors. Long delays are mak­ing some indi­vid­ual cred­i­tors oppose more medi­a­tion attempts.

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


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