Cryptocurrency lender Genesis, currently in bankruptcy proceedings, has submitted a request to the court seeking approval for its proposed settlement with the collapsed cryptocurrency hedge fund Three Arrows Capital (3AC). In the court documents filed on November 9, Genesis argues that 3AC debtors should be entitled to $33 million in allowed general unsecured claims against Genesis, representing 3.3% of the initially filed $1 billion in claims against Genesis debtors.
The proposed settlement outlines that the 3AC debtors would receive $33 million in permitted general unsecured claims against Genesis, fully satisfying claims exceeding $1 billion asserted against each of the Genesis debtors. This settlement is significant as 3AC's $1 billion claim against Genesis is noted as the largest in the Chapter 11 case linked to the collapse of the FTX exchange, according to Genesis. The court documents highlight that 3AC was one of Genesis' major borrowers from 2020 to 2022 until its collapse.
Furthermore, Genesis is seeking approval to waive all claims and rights to AVAX and NEAR tokens, benefiting 3AC debtors. The proposed settlement agreement also specifies that Genesis should relinquish any remaining liabilities. Genesis emphasizes that the settlement is crucial for a smooth path to its Chapter 11 reorganization plan, aiming to minimize potential litigation risks and expenses. The filing suggests that the settlement will simplify the path to confirmation of Genesis' Chapter 11 reorganization plan, expedite plan distributions, and eliminate the risks associated with prolonged litigation.
The proposed settlement has been submitted to the U.S. Bankruptcy Court for the Southern District of New York and awaits approval from Judge Sean Lane. Creditors have until November 24 to object to the settlement, and a hearing is scheduled for November 30. This development coincides with the one-year anniversary of the collapse of the FTX exchange, a significant event that triggered a substantial bear market in the cryptocurrency industry. Genesis and 3AC are among the entities affected by the fallout of FTX, with the Genesis derivatives business losing $175 million in funds locked on FTX during the platform's crash.
