Bankrupt crypto lender Genesis – a subsidiary of Digital Currency Group – has reached a settlement to resolve $1 billion in claims filed by the now-defunct crypto hedge fund Three Arrows Capital (3AC). The filing cited “extensive negotiations” from both parties, resulting in the agreement.
The agreement outlines that the 3AC will receive a $33 million allowed general unsecured claim against Genesis.
Genesis Requests Lower 3AC Claim in Settlement
The official document revealed that the parties mutually release each other from liability, with Genesis debtors retaining any claims against DCG. The proposed settlement includes facilitating the confirmation of their Chapter 11 plan of reorganization.
This agreement aims to expedite distributions under the plan, alleviating the risks, expenses, and uncertainty associated with prolonged litigation among the involved parties.
The Genesis debtors asserted that the entry into the settlement is fair, equitable, reasonable, and in the best interests of their estates and creditors. The motion seeks the court’s approval of the Settlement Agreement for the benefit of all stakeholders involved.
“Entry into the Settlement Agreement is an exercise of the sound business judgment of the Genesis Debtors and has been approved by the Special Committee of the Board of Directors of Holdco, which, following consultation with the Debtors’ legal and financial advisors, has considered the risks associated with litigation of the 3AC Claims and has concluded that the Settlement Agreement is in the best interests of the Genesis Debtors’ estates and their creditors.”
According to Genesis, the $1 billion claims filed by 3AC against the crypto lender stood out as the most significant one in Chapter 11 cases linked to the FTX collapse. Genesis emphasized that the 3AC debtor had been among Genesis’ most significant borrowers from 2020 to 2022, right up to the point of its collapse.
1st Anniversary of FTX’s Collapse
The announcement coincides with the one-year mark of the FTX exchange’s collapse, which triggered a massive downturn in the industry. Genesis is one of many companies impacted by the FTX failure, facing a loss of access to $175 million locked on FTX.
Despite FTX making headlines for a potential revival that boosted its native token FTT, founder Sam Bankman-Fried faced a bleak outcome. He was convicted on all seven charges, including wire fraud, securities fraud, and money laundering conspiracy.
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