According to a court filings, crypto exchange FTX is aiming to recoup cash from fellow insolvent platform Genesis in a combination of returned loans, withdrawn liquidity, and collateral.
Genesis is Involved Heavily in FTX Bankruptcy
As per the documents produced by the troubled exchange’s attorneys in court on May 3, Genesis served as one of the key perpetrators allowing the FTX Group to get away with their reckless behavior.
The legal representation of the insolvent exchange seeks to legitimize its move further by alleging that, unlike other FTX creditors, Genesis was largely compensated.
Genesis has $8B in Outstanding Loans
Notably, Genesis Global Capital (GGC) had more than $8 billion in outstanding loans to FTX Debtor Alameda Research Ltd. in 2021. It reads:
“The FTX Debtors’ Avoidance Claims against Genesis relating to certain of those repayments represent significant avoidance actions in the FTX Chapter 11 Cases.”
The request to refund monies previously withdrawn by Genesis is the most ambitious aspect of a refund attempt.
Genesis Owes FTX $8.9B
According to the FTX Group’s request, roughly $1.8 billion in Genesis liquidity was removed from FTX platforms. The assertion included $1.6 billion in assets belonging to Genesis and a further $213 million belonging to GGC International, a Genesis-affiliated business. The total amount at risk across all Genesis-affiliated firms is more than $3.88 billion.
However it is important to look at the fact that due to the failure of the FTX, the cryptocurrency firm rejected withdrawals on its trading platform in November 2022, and its business was stuck in challenges beyond its control up until this time.
A Multi-Billion Dollar Bankruptcy
In an effort to help the business restructure its operations and provide value to all of its consumers, the bitcoin brokerage service filed for Chapter 11 bankruptcy on January 19.
The business’s bankruptcy filing, which was filed in the United States District Court for the Southern District of New York, named 50 of the firm’s top creditors and alleged that the firm owes them a total of more than $3.5 billion.
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