Bankrupt crypto exchange FTX is seeking to recover billions of dollars from embattled crypto lender Genesis Global Capital.
FTX claims that it was able to retrieve its assets from the crypto exchange before both firms filed for bankruptcy, and is now pursuing a clawback of almost $4 billion from Genesis.
According to a court filing on May 3, FTX creditors are seeking to recover funds from the crypto lender, which filed for Chapter 11 bankruptcy in January.
FTX has alleged that Genesis was “one of the main feeder funds to FTX and instrumental to its fraudulent business model.”
The company lent billions of dollars to Alameda Research, but claims to have been “largely repaid” by the time the firm collapsed. Loans to Alameda totaled as much as $8 billion in 2021, according to reports.
The Filing states that the Avoidance Actions will seek to claw back funds received by Genesis and non-debtor affiliates so that these funds can be shared with all other creditors of the FTX Debtors in the FTX Chapter 11 Cases.
The creditors include “several million customers owed over $11 billion as of the time of filing of FTX Chapter 11 Cases.”
FTX stated that the resolution of its clawback claims will depend on legal questions “concerning the valuation of collateral and the proprietary FTT token as well as payment practices on retail international cryptocurrency exchanges.”
The FTT token was used as collateral for some of the loans the lender had with Alameda. However, the exchange token collapsed after the fall of FTX and currently remains down 98.3% from its peak.
A spokesperson for Genesis said that the firm “remains focused on our restructuring process, through which we are working to reach a consensual resolution that maximizes value for all Genesis clients and stakeholders.”
