Genesis has sought court approval for a proposed settlement agreement with the collapsed crypto hedge fund Three Arrows Capital (3AC), aiming to reduce the latter's claim against Genesis from $1 billion to $33 million.
In a court filing on November 9, Genesis argued that the proposed settlement would grant the 3AC debtor an allowed general unsecured claim amounting to $33 million, representing 3.3% of the initially asserted $1 billion in claims against Genesis debtors.
The filing states, "The agreement provides that the 3AC debtor shall receive an allowed general unsecured claim against GGC in the amount of $33 million in full and complete satisfaction of the more than $1 billion dollars in claims asserted against each of the Genesis debtors."
Genesis emphasized that 3AC's $1 billion claims were the largest in Chapter 11 cases associated with the collapse of the FTX exchange, and the 3AC debtor was one of Genesis's significant borrowers from 2020 to 2022 until its collapse.
As part of the settlement, Genesis also aims to relinquish all claims and entitlements to AVAX and NEAR tokens in favor of the 3AC debtor. The proposed settlement suggests that both bankrupt firms should discard any remaining liabilities.
Genesis justified the settlement as essential for a smooth Chapter 11 reorganization and to minimize potential risks and expenses from litigation. The proposed settlement is expected to facilitate the confirmation of Genesis debtors' Chapter 11 plan of reorganization and eliminate the uncertainties linked to prolonged litigation.
The filing was submitted to the United States Bankruptcy Court for the Southern District of New York, and approval from Judge Sean Lane is required. Creditors have until November 24 to object to the settlement, and a hearing is scheduled for November 30.
This development coincides with the one-year anniversary of the FTX exchange collapse, which triggered a significant bear market in the cryptocurrency industry. Genesis and 3AC are among the companies profoundly affected by the FTX failure due to their exposure to the collapsed platform, with Genesis derivatives business losing access to $175 million locked on FTX.
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