FTX seeks to claw back $4B from Genesis in a battle of the bankrupt
Cryptocurrency exchange FTX is seeking to recover around $4 billion from similarly bankrupt crypto lender Genesis and a still-solvent British Virgin Islands-based entity — part of efforts to recover value for creditors.
In a May 3 court filing in a New York Bankruptcy Court, lawyers for FTX sought $1.8 billion in loans and a $273 million collateral pledge allegedly given to Genesis from FTX’s sister trading firm Alameda Research.
FTX is also seeking to claw back $1.6 billion in withdrawals allegedly made by Genesis and a further $213 million purported to be withdrawn by its BV-based entity GGC International from the exchange before it collapsed into Chapter 11 bankruptcy on Nov. 11.
The filing claims Genesis was “largely repaid” its nearly $8 billion in loans made to Alameda, “unlike other FTX creditors and customers.”
FTX alleged the bankrupt lender was “one of the main feeder funds for FTX and instrumental to its fraudulent business model.”
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The exchange’s lawyers are seeking the clawback under bankruptcy laws that allow it to recoup “avoidable transfers” that occur in a 90-day period before a company declares bankruptcy.
Previous clawbacks by FTX have focused on $3.2 billion in payments made to its former executives, a $460 million investment made by Alameda into venture capital firm Modulo Capital and around $93 million in political donations made by founder Sam Bankman-Fried and other former top brass.
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