Summary of FTX Attempts $3.9 Billion Clawback from Genesis
- FTX is attempting to claw back funds from bankrupt platform Genesis in the form of repaid loans, withdrawn liquidity, and collateral.
- The total sum at stake amounts adds up to over $3.88 billion across all entities affiliated with Genesis.
- Genesis was accused of enabling FTX’s misconduct and largely repaid by them.
FTX Attempts $3.9 Billion Clawback from Genesis
Introduction
Court documents filed on May 3 reveal FTX is attempting to claw back funds in the form of repaid loans, withdrawn liquidity, and collateral from fellow bankrupt platform Genesis. The total sum at stake amounts adds up to over $3.88 billion across all entities affiliated with Genesis.
Accused of Enabling FTX’s Misconduct
In the documents filed by FTX’s lawyers in court on May 3, it is claimed that Genesis was one of the main culprits allowing the FTX Group to get away with their downright rash behavior. The bankrupt exchange’s legal team further attempts to legitimize their motion by claiming that, unlike other FTX creditors, Genesis was largely repaid.
At one point in 2021, Genesis Global Capital (GGC) had over $8 billion of outstanding loans to FTX Debtor Alameda Research Ltd. Unlike other FTX creditors and customers, Genesis was repaid to a large extent. “The FTX Debtors’ Avoidance Claims against Genesis relating to certain of those repayments represent significant avoidance actions in the FTX Chapter 11 Cases.“
Considering that the whole point of a bankruptcy case is to make creditors whole again, this would seem rather counterintuitive. Nevertheless, $.188 billion of the attempted clawback represent loans re-paid by GGC since February 2021 alone according to court documents filed on May 3rd.
Attempted Clawback Sum
As mentioned earlier, the total sum at stake amounts adds up to over $3.88 billion across all entities affiliated with GGC—broken down into several parts: roughly 1% ($38 million) represents assets withdrawn from GGC prior its collapse; 57% ($2 .22B) represents paid out collateral; 42% ($1 .51B) represents repayment for loans granted by GGC prior its bankruptcy filing; 0 .03% ($12M) represents fees owed for services provided during 2020/2021; and 0 .0023% ($8M+)represent miscellaneous expenses such as advertising fees etcetera paid out towards GGC prior its bankruptcy filing last month as per court documents revealed on May 3rd this year..Background Information
Genesis Global Capital (GGC), founded in 2018 as an institutional digital asset provider specializing in cryptocurrency lending & trading products & services had grown rapidly until it collapsed under mounting debt last month when it declared bankruptcy after suffering losses due a market downturn combined with heavy debt load placed upon it following rapid growth sustaining heavy losses due a market downturn combined with heavy debt load placed upon it following rapid growth throughout 2020/2021 timeframe..