FTX and Genesis Reach $175 Million Settlement After $4 Billion Demand

Bankrupt crypto exchange FTX has reached a $175 million settlement with collapsed crypto lender Genesis, following a nearly $4 billion claim made on behalf of FTX’s failed sister company, trading firm Alameda Research

Documents filed Wednesday show that Genesis has agreed to pay FTX the sum after the debtors in May accused the crypto lending firm of being “one of the main feeder funds for FTX and instrumental to its fraudulent business model.”

In the documents, current FTX CEO John J. Ray III described the settlement as “fair and equitable,” and that the agreed-upon amount is “well within the range of reasonableness.” The settlement must still be approved by judges in each bankruptcy case.

FTX had originally tried to recover approximately $3.9 billion from Genesis. The Digital Currency Group-owned Genesis halted customer withdrawals in November after the collapse of FTX. It was one of many crypto firms to go bust following a turbulent 2022. 

Alameda Research was a crypto trading company set up by FTX co-founder and former CEO Sam Bankman-Fried. It crashed when digital asset behemoth FTX went bust, taking all of its affiliated companies with it. 

The massive crypto brand unexpectedly went bankrupt in November, and the 31-year-old Bankman-Fried was later arrested in the Bahamas. Prosecutors allege that he mismanaged the exchange and committed fraud in “one of the most abrupt and difficult collapses in the history of corporate America,” in the words of James Bromley, counsel to FTX’s new management. 

Disgraced crypto mogul Bankman-Fried—also known as SBF—was jailed last week after a judge found probable cause to believe he had tampered with witnesses. 

He is facing a number of criminal charges—including allegedly using stolen customer cash to make “contributions to Democrats and Republicans to seek to influence cryptocurrency regulation.”

Bankman-Fried’s trial is expected to start in October.