The most recent proposal involves the debtors of FTX, the bankrupt crypto exchange, amending their settlement motion in response to an objection raised by the U.S. Trustee. This information was disclosed in a court filing on Sunday. Despite criticizing the U.S. Trustee for being the only objector to the motion and trying to intervene in a settlement process already safeguarded by two creditor committees, the FTX debtors have decided to make changes to address the concerns.
Under the updated proposal, the debtors will include the U.S. Trustee as a notified party and will lower the maximum settlement value for claims covered by the procedures from the initial $10 million to $7 million. Additionally, the debtors will submit monthly reports detailing executed settlements. If any objections arise from the “noticed parties,” these disputes will need to be resolved or settled through a court order before the claim process can proceed. The two creditor committees involved are the Official Committee of Unsecured Creditors and the ad hoc committee of international customers.
The U.S. Trustee’s initial objection was rooted in the assertion that $10 million was too high to qualify as a “small” claim, and the objection also criticized the lack of adequate notice regarding the nature of the claims.
FTX, which was previously the world’s third-largest digital assets exchange, declared bankruptcy in November of the prior year.
FTX-Connected Alameda Presents $175 Million Claim
Alameda Research, a cryptocurrency trading company connected to FTX, has been approved for an unsecured claim of $175 million within the bankruptcy estate of Genesis Global Capital, a crypto lender. This information comes from a court document dated Wednesday.
This settlement represents a substantial decrease compared to the approximately $3.9 billion claim that FTX, another entity currently in bankruptcy, had initially put forward earlier this year. Genesis has characterized the settlement as “just and reasonable,” and it will enable the company to bypass the need for prolonged legal disputes, which inherently carry uncertain outcomes.
After a tumultuous 2022 that negatively impacted investor confidence in bitcoin and other cryptocurrency tokens, FTX and Genesis Global, previously prominent players in the digital asset exchange and lending sectors, are among several crypto companies that have faced financial collapse.
Sam Bankman-Fried, the founder of FTX, is facing allegations of orchestrating a significant fraudulent scheme. Recently, a U.S. judge revoked his bail, citing credible evidence that he interfered with witnesses on at least two occasions. FTX has previously stated that Genesis played a key role as a “feeder fund” for Alameda, providing it with cryptocurrency assets that were subsequently utilized for additional loans and investments. As part of the resolution, both companies have also mutually agreed to drop all claims against each other.