Genesis, the beleaguered cryptocurrency lender is on the cusp of sealing a pivotal settlement in its $1 billion lawsuit with the now-collapsed cryptocurrency hedge fund, Three Arrows Capital (3AC). Newly surfaced court documents shed light on this groundbreaking agreement, with Genesis poised to disburse $33 million to draw a line under this significant chapter. However, it’s essential to note that this negotiated accord hinges on the green light from the judiciary.
To comprehend the magnitude of this settlement, we need to rewind to June 2022 when the tumultuous collapse of 3 Arrows Capital sent shockwaves through the cryptocurrency realm. The crux of this settlement revolves around claims associated with transactions predating Genesis’s financial downturn in January, encompassing sums exceeding $1 billion.
This agreement marks a pivotal moment in the crypto world as it seeks to address the escalating competitiveness within Bitcoin mining. Genesis filed a request with the New York bankruptcy court for approval of the settlement, with a hearing scheduled for November 30 to secure the judiciary’s blessing.
Three Arrows Capital’s Audacious Journey
Three Arrows Capital’s audacious journey, peppered with extravagant Bitcoin price predictions, sets it apart in the realm of crypto hedge funds. A noteworthy aspect is Three Arrows Capital’s substantial borrowing from Genesis between 2020 and 2022, a move that reverberated when the fund’s collapse rocked the industry in June 2022. Notably, all the claims against Genesis were linked to transactions antedating the bankruptcy declaration in January.
Genesis’s Strategic Maneuver
In November 2023, Genesis introduced a fresh bankruptcy strategy, turning the spotlight back on this high-stakes courtroom battle. This legal tussle bears significance for the entire cryptocurrency industry, and its outcome remains a point of intrigue for enthusiasts and investors alike.
Genesis formally sought the court’s endorsement for a settlement in the $1 billion lawsuit with Three Arrows Capital on November 9. The proposed deal entails Genesis paying a $33 million general unsecured claim, amounting to 3.3% of the initial $1 billion in claims against the company’s creditors.
This settlement aims to resolve the contentious Chapter 11 litigation tied to the collapse of the FTX exchange, with Genesis asserting that 3AC’s $1 billion claims against it constituted the most substantial. Furthermore, the settlement seeks to release the 3AC debtor from any claims pertaining to AVAX tokens.
Benefits of Settlement
Genesis justifies the settlement by emphasizing the elimination of litigation risks, expenses, and uncertainties that protracted legal battles bring. Clearing the path for Chapter 11 restructuring plans and prompt distributions to Genesis debtors’ estates are among the intended benefits. However, it is imperative that Judge Sean Lane of the United States Bankruptcy Court for the Southern District of New York approves the proposed settlement, with creditors having until November 24 to voice any concerns before a hearing on November 30.
This revelation coincides with the first anniversary of the FTX exchange’s bankruptcy, a development that catalyzed a significant bear market in cryptocurrencies. Genesis and 3AC are among the many entities exposed to the defunct FTX platform, with the latter’s derivatives division losing access to $175 million locked on the platform.
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