Just a month after bankrupt cryptocurrency exchange FTX demanded $4 billion from the also bankrupt cryptocurrency lender Genesis, it is now challenging a claim that it is entitled to nothing.
According to a court of June 2 deposit In a New York bankruptcy court, FTX debtors raised an objection to Genesis’ estimate that they are entitled to claims totaling ‘$0.00’ – which Genesis said in a motion on estimation procedures filed on June 1st.
The FTX debtors alleged that they were not involved in the mediation process and received “no notice” before the petition was filed.
A statement made by Genesis in the petition suggesting that FTX debtors were kept informed has been refuted:
FTX Debtors were not invited to participate in the mediation despite the Genesis Debtors’ statement in the Estimate Proceedings Petition that they are “working expeditiously with all interested parties to formulate a plan structure.”
It was reiterated in the filing that the nil claim estimate, as described in the motion, was deemed “critical” by Genesis debtors to avoid any delays and move quickly with the “confirmation of ‘A Plan of Chapter 11’.
It was argued that the FTX Debtors “are by far the largest unsecured creditors in the Genesis Debtors’ Chapter 11 cases” and that it is crucial that they participate in the mediation, noting:
“Mediation is a waste of real estate resources without the inclusion of FTX Debtors and should not proceed without the involvement of FTX Debtors.”
It wasn’t until May 3 that FTX lawyers demanded nearly $4 billion from Genesis in New York bankruptcy court, under bankruptcy laws that allow it to recover “avoidable transfers” that occur within a 90-day period before a business declares bankruptcy.
FTX’s debtors filed a motion for waiver of stay – asking the court to lift the automatic stay, suspending legal action against Genesis, when it filed for bankruptcy.
The motion has been asked to be heard in court on June 15.
Related: SBF wants to subpoena documents from former FTX/Alameda law firm to use in its defense
On May 9, Digital Currency Group (DCG), the parent company of crypto firm Genesis Capital, on May 9 reported no resolution to its “pending intercompany obligations” that could help repay creditors.
During this period, DCG was engaged in a period of mediation with Genesis in response to claims made by creditors.
Last February, the company proposed a settlement plan, which would see Genesis creditors receive an 80% recovery of funds after the company filed for Chapter 11 bankruptcy.
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