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Bankrupt cryptocurrency lender Genesis has asked the court to approve its proposed settlement agreement with the imploded crypto hedge fund Three Arrows Capital (3AC).
According to a court filing on Nov. 9, Genesis argued that the 3AC debtor should receive an allowed general unsecured claim against Genesis in the amount of $33 million. The amount accounts for 3.3% of $1 billion in claims originally asserted against Genesis debtors.
“Agreement provides that the 3AC debtor shall receive an allowed general unsecured claim against GGC in the amount of $33 million in full and complete satisfaction of the more than $1 billion dollars in claims asserted against each of the Genesis debtors,” the document reads.
According to Genesis, 3AC’s $1 billion claims against Genesis were the largest asserted claims in Chapter 11 cases associated with the collapse of the FTX exchange. Genesis stressed that 3AC Debtor was one of Genesis’s largest borrowers from 2020 to 2022, up until the time of its collapse.
Additionally, Genesis wants to relinquish all of its claims and entitlements to Avalanche (AVAX) tokens and Near Protocol (NEAR) tokens in favor of the 3AC debtor. The bankrupt firms should drop any remaining liabilities, the proposed settlement reads, stating:
“The Genesis debtors and 3AC mutually release each other from liability as set forth in more detail in the Settlement Agreement; and the Genesis debtors expressly retain, and do not otherwise release, any and all claims that they may have against DCG.”
The lender said that the settlement was necessary to provide a smooth path for its Chapter 11 reorganization plans and to reduce potential risks and expenses from litigation.
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“The proposed settlement will, among other benefits to the Genesis debtors’ estates, significantly smooth the path to confirmation of the Genesis debtors’ Chapter 11 plan of reorganization, prompt distributions thereunder, and eliminate the risks, expenses, and uncertainty associated with protracted litigation among the parties,” the document reads.
The proposed settlement agreement was filed at the United States Bankruptcy Court for the Southern District of New York and requires Judge Sean Lane’s approval. Creditors can object to the settlement by Nov. 24, with a hearing scheduled for Nov. 30.
The news comes around the anniversary of the FTX exchange collapse a year ago, pulling the cryptocurrency industry into a massive bear market. Genesis and 3AC are just a few of the many companies affected by FTX failure due to exposure to the collapsed platform, with Genesis derivatives business losing access to $175 million locked on FTX.
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