FTX seeks court permission to sell its claim:
- FTX is looking to sell a $175 million claim against Genesis Global Capital.
- The claim has been reduced from $3.9 billion to avoid legal uncertainties.
- Claims against Genesis are currently selling at 65% of their face value.
FTX’s motion and its implications
FTX, which is in bankruptcy, filed a motion with a Delaware court on February 1st, seeking permission to sell its $175 million claim against Genesis Global Capital, which is also in bankruptcy.
This action, initiated by FTX-associated hedge fund Alameda Research, could allow FTX to sell the claim in whole or in part, under the most favorable conditions.
The current market value of these claims, estimated at 65% of their face value, sharply contrasts with the 38% obtained for Alameda Research’s claims. The motion aims to simplify the selling process by avoiding the costs and delays associated with filing a separate motion for each potential sale.
“The entry of this order is in the best interests of the debtors and their estates, creditors, interest holders, and all other interested parties.”
according to the filing
Furthermore, please note that the sale price must reach a minimum of 95% of the highest value proposed by one or more major market participants for the “unsecured claims of GGC“.
Context and consequences of the negotiation
FTX’s initial request to recover $3.9 billion from Genesis has been significantly reduced through negotiations, thus avoiding the uncertainty and costs of prolonged litigation.
This amount was agreed upon between FTX and Genesis in August 2023 and approved by the court in October, cancelling other FTX claims against Genesis at that time.
This decision reflects a strategy to maximize potential recoveries while minimizing the risks and costs associated with uncertain litigation. The bankruptcy of FTX in November 2022, followed by Genesis’ bankruptcy in January 2023, has brought to light the systemic risks within the cryptocurrency ecosystem.
