Bankrupt crypto exchange FTX wants to recover billions of dollars from Digital Currency Group’s bankrupt crypto lending subsidiary Genesis.
In a motion filed on May 3, lawyers for the FTX Group sought to claw back $3.9 billion worth of cash and crypto from Genesis, from “avoidable transfers” that were made 90-days before the exchange declared bankruptcy.
FTX’s lawyers argued that unlike other creditors and customers, Genesis was largely repaid by FTX debtor Alameda Research.
“Genesis was one of the main feeder funds for FTX and instrumental to its fraudulent business model. At one point in 2021, GGC had over $8 billion of outstanding loans to FTX Debtor Alameda Research Ltd,” the filing said.
The exchange is seeking $1.8 billion worth of loans that were repaid and $273 million worth of collateral that was pledged to Genesis. Additionally, the firm is also looking to recoup $1.6 billion worth of crypto withdrawn by Genesis from FTX.com.
The lawyers further made a case for the avoidance claims to be extended to Genesis Global Capital’s international entity, which made $213 million worth of withdrawals from the bankrupt exchange.
https://twitter.com/AFTXcreditor/status/1653883349021106179
“The Avoidance Actions will seek to claw back funds received by Genesis and non-debtor affiliates so that these funds can be shared with all other creditors of the FTX Debtors in the FTX Chapter 11 Cases,” stated the filing. These creditors include several million FTX customers owed over $11 billion.
FTX’s bankruptcy estate has entered an agreement to claw back $400 million from Modulo Capital, a lesser-known trading firm funded by former FTX CEO Sam Bankman-Fried. The debtors are also seeking to claw back $3.2 billion of payments made to former executives, most of which went to Bankman-Fried and his inner circle.
