California: FTX Trading and its affiliates joined a smattering of other creditors of bankrupt crypto lender Genesis Global Holdco in objecting to extending court-mediated settlement talks, according to a court filing.
Claiming to be a major Genesis creditor, FTX said it hadn’t been invited to court-appointed mediation that went on in May and included Genesis, its parent company Digital Currency Group and creditors such as crypto exchange Gemini Trust Co.
FTX also said it was caught off guard when Genesis filed on Thursday to have FTX’s unliquidated claims estimated at zero. FTX says it is owed $3.9 billion. Genesis said that throwing out the FTX claims “is critical to avoid undue delay in the timing and amount of creditor distributions, and to expeditiously pursue confirmation of a Chapter 11 plan.”
The objection adds yet another complication to the attempts for a settlement between DCG, Genesis and its creditors. FTX is joining more than a dozen other individual Genesis creditors who have filed their objections to extending the mediation. Genesis is seeking to continue the talks through June 16, and claims to have the support of DCG and Gemini. A hearing on the extension is scheduled for Monday.
Because FTX hasn’t been included, “the mediation is a waste of estate resources without the inclusion of the FTX Debtors and should not continue without the FTX Debtors’ involvement,” FTX said in its filing.
‘Absence’ of progress
Genesis, which used to offer clients yield for lending out their digital coins, froze withdrawals in mid-November partly due to its exposure to the collapse of FTX, which went bankrupt that month. Genesis filed for bankruptcy in January, and has been working with creditors to hammer out a settlement since. Genesis and its creditors worked out a preliminary settlement agreement in February, but it was never finalized. The months-long delays are pushing some individual creditors to oppose further mediated attempts.
“As a creditor who has diligently been following the proceeding, I, along with many others, have observed a concerning absence of substantial progress in resolving the financial matters at hand,” wrote creditor Yosif Sharif. “Without concrete actions or a genuine commitment to reaching a fair resolution, it is difficult to perceive this extension as anything more than a delay tactic.”
While there is no official report on progress made in the mediated settlement negotiations in May, both Gemini and DCG have begun in parallel working on alternative solutions: DCG is trying to raise some financing, while Gemini and two key creditors committees are working on “an amended plan of reorganization that could be advanced without DCG’s consensual participation should the mediation fail,” the crypto exchange said on May 26.
Hundreds of thousands of Gemini’s customers lent their coins via a program called Earn through Genesis, and are seeking the return of some $900 million. Both Genesis and Gemini are facing a Securities and Exchange Commission’s lawsuit over Earn, which both companies recently filed to have dismissed.