FTX’s stranded customers have expressed disappointment over the recent bankruptcy claim settlement.
The bankrupt exchange recently reached a $175 million deal to settle bankruptcy claims with Genesis.
The deal was significantly lower than the original claim amount of nearly $4 billion.
The exchange’s CEO John Ray III endorsed the settlement in the interest of concluding the Chapter 11 proceedings.
FTX has settled its bankruptcy claims against fellow bankrupt crypto Genesis. The agreement will allow the defunct crypto exchange’s sister firm Alameda Research to claim $175 million from the bankruptcy estate of Genesis. However, the claim amount is significantly less than the original claim of nearly $4 billion, which has caused considerable outrage among FTX’s stranded customers.
FTX CEO John Ray Supports Settlement With Genesis
In a filing earlier today, Genesis’ lawyers requested Judge Sean Lane of the U.S. Bankruptcy Court for the Southern District of New York to approve the proposed settlement. Genesis stated in the filing that the settlement would help speed up its Chapter 11 proceedings, which begin in early 2023.
In addition to paying $175 million to FTX’s bankruptcy estate, the proposed settlement would also waive Genesis’ claims of more than $226 million against the bankrupt crypto exchange. Genesis Global Capital previously revealed that the Bahamas-based exchange was its largest unsecured creditor.
FTX made a parallel filing where it’s current CEO John Ray III endorsed the latest deal with Genesis. Ray added that the settlement agreement saved both parties from a long and expensive legal process that would be harmful to their respective stakeholders.
It is my view that the Settlement Agreement is the result of these good faith arm’s-length negotiations between the Parties and that such negotiations were free of any collusion.”
John Ray, CEO of FTX
FTX’s stranded customers took issue with the deal, given that it was significantly less than the original $3.9 billion claim. FTX 2.0 Coalition, a community of the exchange’s users working to restart the platform, described it as “the worst deal to date.” Other users alleged collusion between John Ray and Genesis’ executives and urged the Unsecured Creditors Committee to oppose the said deal.
News of the $175 million settlement comes less than a month after both parties reached an in-principle agreement to resolve the claims they made amid their ongoing dispute. On July 28, legal representatives of FTX and Genesis informed Judge Lane that they had found common ground regarding a settlement and intended to proceed with documentation shortly.