Bankruptcy
Genesis lenders call DCG agreement ‘wholly insufficient’
Published
9 months agoon
By
adminThe lenders of the bankrupt cryptocurrency lender Genesis are not satisfied with the latest in-principle settlement agreement with other parties including the Digital Currency Group (DCG).
The Ad Hoc Group of Genesis Global Capital (GGC) lenders — represented by lawyers Brian Rosen and Jordan Sazant — on Aug. 29 responded to a public bankruptcy plan update, calling the reached in-principle agreement “wholly insufficient.”
Posted hours before, the public update said that DCG reached an agreement in principle with Genesis’ unsecured creditors (UCC) and debtors, proposing USD equivalent recoveries of 70%–90%. The update stressed that neither the Ad Hoc Group nor the Gemini exchange supported the deal in principle described in the plan update.
“Although the mediation has terminated, constructive discussions with the Ad Hoc Group and Gemini regarding the aforementioned agreed-upon deal in principle are ongoing,” the update noted.
In response, the Ad Hoc Group stressed that it indeed does not support the proposed agreement in principle, calling DCG’s contribution “wholly insufficient to satisfy” the loan amounts. The lenders argued that the debtors and UCC are “unwilling to comply with their fiduciary obligations” to maximize creditor recoveries, arguing that they are instead trying to put the base behind them. The filing added:
“The Ad Hoc Group, which includes dozens of creditors for whom these assets are critical, does not have such luxury and cannot support the proposed terms of the plan update which permit DCG to walk away untouched and, in fact, paying less than already committed.”
The Genesis lenders also argued that DCG should not be entitled to non-consensual third party releases, which release non-debtor parties from liability to other non-debtor parties without the consent of all potential claimholders.
Related: Gemini files brief in lawsuit against SEC, requests to keep it simple
The Ad Hoc Group argued that the debtors and UCC have agreed to “improperly cause the release of third party claims” against DCG and its related parties.
“Instead of receiving $630 million that matured and should have been paid 3 months ago, DCG will only be paying $275 million now and will pay another $328.8 million in another 2 years,” the lenders stated, adding:
“There is no conceivable scenario where these contributions can be considered to be a substantial contribution of assets sufficient to merit releases from the estate claims, let alone third-party creditor claims.”
Genesis is among cryptocurrency lending firms that were affected by the cryptocurrency winter of 2022. The lender filed for bankruptcy in January 2023 after suspending withdrawals amid a massive liquidity crisis in mid-November 2022. The firm reportedly owed more than $3.5 billion to its top 50 creditors, including firms like Gemini.
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Bankruptcy
Crypto Asset Management Firm Sells $65,000,000 Claim in FTX Bankruptcy, According to CIO
Published
5 months agoon
December 24, 2023By
adminA top executive of a crypto asset management firm says that the company has sold its multi-million dollar claim in FTX’s bankruptcy.
In a lengthy thread, Ikigai Asset Management chief investment officer Travis Kling tells his 98,100 followers on the social media platform X that the firm sold its $65 million claim in FTX’s bankruptcy at a price much higher than initially anticipated.
“At the end of the day, the decision on whether to sell the claim was mostly a function of opportunity cost – how much do you think the claim price would increase in the future versus taking the cash now and deploying it into something else that can earn a return.”
According to Kling, Ikigai was initially optimistic about the potential revival of FTX through FTX 2.0 but the firm’s stance changed after witnessing the mistakes made by the entities behind the bankrupt exchange.
“I was (and still am) very interested in FTX 2.0. But the Debtors have fumbled that process so badly, and progress has been so slow, that it didn’t make sense for us to hang around in the claim any longer waiting for something to maybe happen with 2.0.”
The Ikigai CIO goes on to say that the majority of the cash obtained from the sale will remain in the fund and investors who want to redeem the money will be able to do so. Furthermore, he says that the digital assets industry appears to be on the cusp of another bull run.
“The market looks like it’s well on its way towards another bull cycle. It’s kinda astonishing, to be honest. Despite the industry’s deep and wide missteps over the last few years, it appears the world is giving this ecosystem another crack at it. Another shot to deliver real value.”
FTX originally filed for bankruptcy in late 2022 after its native asset collapsed and its founder, Sam Bankman-Fried, was accused of defrauding investors and mishandling customer funds. Last month, Bankman-Fried was found guilty of his charges and is facing a total possible sentence of 115 years in prison.
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Bankruptcy
Investors buy $250M of FTX claims — Report
Published
8 months agoon
September 22, 2023By
adminThe bankruptcy claims market has been growing bullish on the debts of the collapsed cryptocurrency exchange FTX as major credit investors have been rushing to buy FTX debts.
Investors like Silver Point Capital, Diameter Capital Partners and Attestor Capital have purchased more than $250 million worth of FTX debts so far in 2023, Bloomberg reported on Sept. 21, citing an in-house analysis of public court filings.
The FTX debt has also attracted investors like Hudson Bay Capital Management, which reportedly bought a $23 million FTX claim and subsequently sold about 50% of it to Diameter.
In line with growing demand, the price of some FTX claims has been soaring this year. Some low-ranking FTX claims have jumped 191%, surging from $0.12 in early 2023 to about $0.35 recorded in recent weeks, the report said, citing data from the crypto debt broker Claims Market.
The historical indicative prices of “bid” and “ask” for larger FTX claims have also been on the rise this year, according to the Claims Market’s charts.
The debt investors have been piling up FTX Group claims, betting that the firm’s bankruptcy process would unlock additional value by the time it’s resolved. One potential trade-off is that major bankruptcies can take years to unwind, and it can be hard to know what a collapsed company would be worth, especially in crypto.
According to some bankruptcy claim investors, the total value of all traded FTX claims might be much higher than the $250 million of deals seen in public court records.
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Bankruptcy claims investor Thomas Braziel reportedly said that buyers and sellers sometimes wait months to file the paperwork for a debt trade. He claimed to be aware of individual FTX claims of more than $100 million. Braziel stated in the report:
“People made careers off of Lehman and Madoff — I think people see FTX as a Lehman or Madoff. The guys that are buying in these dockets, I consider them some of the smartest people in distressed.”
According to the report, many investors have been buying the rights to FTX crypto accounts with assets stuck on the platform after FTX halted all withdrawals in November 2022. Debt investment firm Contrarian Capital Management reportedly purchased an FTX account holding a massive amount of Bitcoin (BTC) and Ether (ETH), alongside $430,000 of cash.
Some crypto bankruptcies have also been taking years to be settled. Mt. Gox, once a major crypto exchange that was hacked back in 2014, has recently again postponed the deadline to return Bitcoin holdings to investors by one more year. At the time of writing, Bitcoin has surged more than 3,000% since Mt. Gox barred its users from withdrawing crypto in the aftermath of the hack.
The news comes amid FTX restructuring executives reminding investors to complete the claims process through the FTX Customer Claims Portal by the deadline of Sept. 29, 2023.
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Bankruptcy
FTX sues LayerZero Labs, seeks to recover over $21M moved prior to bankruptcy
Published
8 months agoon
September 11, 2023By
adminBankrupt crypto exchange FTX has filed a lawsuit against cross-chain protocol LayerZero Labs, seeking to recover $21 million in funds that were allegedly illegally withdrawn prior to FTX’s shutdown in November 2022, according to court documents filed on September 9.
The case traces back to transactions made from January to May 2022, between Alameda Ventures — the venture capital arm of Alameda Research, FTX’s sister company — and LayerZero.
According to the court filing, Alameda Ventures paid more than $70 million in two transactions to acquire a stake of roughly 4.92% in LayerZero. Also, in March, Alameda Ventures paid another $25 million for 100 million STG tokens at a public auction, to be distributed over a period of six months beginning in March 2023.
Super excited to work with @LayerZero_Labs!
They’re building out a key missing piece of crypto infrastructure–cross-chain liquidity.
And more importantly, they’re doing a great job of building great products. https://t.co/TvEC6sfpeE
— SBF (@SBF_FTX) March 30, 2022
Amidst these transactions, in February, LayerZero loaned $45 million to Alameda Ventures’ parent, Alameda Research, under a promissory note bearing an annual interest rate of 8%.
When FTX’s crisis unfolded in early November, LayerZero sought a deal for the return of its stake owned by Alameda. The agreement included the return of shares to LayerZero in exchange for the forgiveness of the $45 million loan. Another deal related to 100 million STG tokens was also reached, which LayerZero purchased back at a discount for $10 million on Nov. 9. This transaction, however, was never completed. LayerZero did not pay for the tokens, and Alameda Ventures did not transfer the tokens.
put simply
we did indeed buy all of the tokens (back)
better is better
– RAZ & Bryan https://t.co/anBSloYRLV
— raz (@ryanzarick) November 10, 2022
FTX alleges in the lawsuit that LayerZero exploited Alameda Ventures during a liquidity crisis:
“LayerZero was well aware that Alameda Research was facing a liquidity crisis and, within about 24 hours, negotiated a fire-sale transaction with Caroline Ellison, Alameda Research’s then-CEO.”
Along with the agreements’ cancellation, the complaint seeks recovery of funds withdrawn days before FTX bankruptcy filing, including approximately $21.37 million from LayerZero Labs, as well as $13.07 million from Ari Litan, its former chief operating officer, and $6.65 million from a subsidiary, Skip & Goose.
LayerZero Labs isn’t the first company to be sued by FTX. The bankrupt company is also attempting to recoup billions in funds from transactions made by a number of subsidiaries before the collapse of its conglomerate.
Cointelegraph reached out to LayerZero Labs, but did not receive a response at the time of publication. The lawsuit is not related to LayerZero Power Systems, a company that owns the LayerZero trademark and does not operate in the crypto industry.
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