Just a month after bankrupt cryptocurrency exchange FTX was seeking $4 billion from the also bankrupt crypto lender Genesis, it is now contesting a claim that it is entitled to nothing.
According to a June 2 court filing in a New York Bankruptcy Court, the FTX debtors have raised an objection to Genesis’ estimation that they are entitled to claims totalling ‘$0.00’ – which Genesis stated in an estimation procedures motion filed on June 1.
The FTX debtors alleged they were not involved in the mediation process and not given “any advance notice” prior to the motion being filed.
In fact, the FTX debtors even refuted a statement made by Genesis suggesting that the FTX debtors were kept informed throughout the proceedings:
“The FTX Debtors have not been invited to participate in the mediation despite the Genesis Debtors’ representation in the Estimation Procedures Motion that they are “working expeditiously with all parties in interest to formulate a plan structure.”
It was reiterated that the nil claim estimation, as outlined in the motion, was deemed “critical” by the Genesis debtors to prevent any delays, and promptly move forward with the “confirmation of a Chapter 11 plan.”
It was argued that the FTX debtors “are by far the largest unsecured creditors in the Genesis Debtors’ Chapter 11 cases” and crucial that they participate in the mediation, noting:
“The mediation is a waste of estate resources without the inclusion of the FTX Debtors and should not continue without the FTX Debtors’ involvement.”
It was only on May 3 that lawyers for FTX were seeking almost $4 billion from Genesis, under bankruptcy laws which allow it to recoup “avoidable transfers” that occur in a 90-day period before a company declares bankruptcy.
The FTX debtors have submitted a motion seeking relief from the stay – a request for the court to lift the automatic suspension on legal proceedings against Genesis, which is a standard procedure when a firm files for bankruptcy.
It was requested that the motion is set to be heard by the court on June 15.
This comes after Digital Currency Group (DCG), the parent company of crypto firm Genesis Capital, reported on May 9 that it had no solution to its “outstanding intercompany obligations” that could help reimburse creditors.
During this period, DCG was engaged in a mediation period with Genesis in response to demands made by creditors.
Back in February, the firm had put forward a settlement plan, anticipating that Genesis creditors would receive an 80% recovery of funds after the company filed for Chapter 11 bankruptcy.