Genesis seeks court approval to reduce its claim against 3AC from $1 billion to $33 million
Crypto lender Genesis, currently in bankruptcy, has requested court approval for a proposed settlement agreement with collapsed hedge fund Three Arrows Capital (3AC). The filing suggests that 3AC’s claim against Genesis be reduced to $33 million, representing only 3.3% of the initial $1 billion claim.
Details of the settlement agreement
According to Genesis, 3AC’s $1 billion claim against the company was the largest in the Chapter 11 proceedings related to the collapse of FTX. Genesis highlights that 3AC, the debtor, was one of its largest borrowers from 2020 to 2022 until its collapse.
The agreement also proposes that Genesis waive all its claims and rights to Avalanche (AVAX) and Near Protocol (NEAR) tokens in favor of 3AC. The bankrupt companies are expected to relinquish all remaining liabilities, with the settlement agreement stating:
The debtors of Genesis and 3AC release each other from all claims, as detailed in the Settlement Agreement; and the debtors of Genesis expressly retain, and do not otherwise release, any claims they may have against DCG.
Objectives and implications of the agreement
Genesis argues that this agreement is necessary to ensure a smooth path for its Chapter 11 reorganization plans and to reduce potential risks and expenses associated with litigation. The agreement, filed with the United States Bankruptcy Court for the Southern District of New York, requires approval from Judge Sean Lane. Creditors may object to the agreement until November 24, with a hearing scheduled for November 30.
This agreement comes around the anniversary of the FTX collapse one year ago, which sent the cryptocurrency industry into a major bear market. Genesis and 3AC are just a few of the many companies affected by FTX’s failure due to their exposure to the collapsed platform, with Genesis’ derivatives branch losing access to $175 million locked on FTX.
