The ambitious $175 million settlement agreement between Genesis Global Capital (GGC) and FTX has hit a snag. A group of disgruntled creditors, led by cryptocurrency exchange Gemini, accuses Genesis of exploiting the bankruptcy process to fast-track this ‘special agreement‘ with FTX. Gemini’s court filing, claiming that Genesis owes them around $766 million, strongly criticizes the proposed agreement as an exercise in vote manipulation. The dispute argues that the agreement ‘cannot be accepted at face value’ and amounts to a ‘perversion of the Chapter 11 process.’
Genesis, in pursuing the proposed settlement, sought to purchase the support of FTX’s debtors and their votes.
Fair Deal Group enters the fray
Echoing Gemini’s sentiments, an entity identifying itself as the Fair Deal Group has also filed a complaint. The collective alleges that Genesis is essentially buying FTX’s vote, thus undermining the integrity of the Chapter 11 process. The secretive group has not disclosed its members but claims that they collectively owe Genesis $2.4 billion, holding a majority stake in each class of claims.
Legal hurdles on the path to Genesis’ reorganization
Genesis is no stranger to controversy. Since filing for bankruptcy in January, the company has been embroiled in disputes over how to handle over $1 billion owed to its parent company, Digital Currency Group (DCG). The company’s legal team had previously stated that the FTX agreement would greatly aid these challenges, but the mounting opposition suggests otherwise.
All eyes are now on bankruptcy judge Sean Lane, who will review the controversial settlement between Genesis and FTX on September 6th in the southern district of New York. With powerful stakeholders and serious allegations involved, this hearing promises to be a pivotal moment in what has already been a complex and fractured bankruptcy process.
