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FTX's Debtors Challenge Genesis' Assertion of Zero Claims in Bankruptcy Proceedings

Discontent Arises as FTX Seeks Recourse for Nearly $4 Billion Debt

Mon, 05 Jun 2023, 02:55 am UTC

Following the recent bankruptcy declaration of digital currency exchange FTX, questions are being raised regarding Genesis' claim that it owes nothing to FTX as a financially insolvent crypto creditor.

A court document filed on June 2 in the United States Bankruptcy Court reveals FTX's debtors expressing their dissatisfaction with Genesis' assertion of a "$0.00" claim. The debtors argue that they were not informed or involved in the negotiation process and had received no prior warning before the motion was submitted. They emphasize the significance of Genesis' claim estimation in order to move forward with a Chapter 11 strategy without delays. The document asserts that FTX's debtors are the largest unsecured creditors in Genesis's Chapter 11 proceedings and deserve a say in the negotiations.

As early as May 3, FTX's legal team sought nearly $4 billion from Genesis, invoking bankruptcy regulations that allow for the recovery of "avoidable transfers" made within 90 days prior to the declaration of bankruptcy.

In response, FTX's debtors have filed a motion seeking relief from the stay, requesting the court to lift the automatic halt on legal actions against Genesis, a standard procedure in bankruptcy cases.

This development follows the disclosure by Genesis's parent organization, the Digital Currency Group (DCG), that it lacks the means to address its "unsettled intercompany liabilities" and repay creditors. DCG has entered into negotiations with Genesis to address the demands presented by the creditors during this period.

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