A US court has approved settlement terms for bankrupt digital asset lender Genesis and FTX’s sister company Alameda Research.
A Court file on October 11, the judicial accent obscured the agreement that both companies signed in the course of the competition.
Under the agreement, it will receive Alameda Research $175 million from Genesis Globalan agreement described as “fair and equitable” as it would help save time and money invested in litigation; however, shareholders of FTX and other companies involved in the bankruptcy proceedings have denounced the deal.
As a result of the court’s decision, the debtors can comply with the terms of the settlement agreement approved by New York Judge Sean Lane.
The judge struck out several claims from creditors, including six from Alameda Research, three from FTX Trading and an additional six from West Realm Shires Services, a representative of FTX US.
Both FTX and Genesis are in the middle of the bankruptcies as investors seek to recover the lost assets and restructure them in the best possible way to protect some assets of the company.
The recent settlement comes amid the ongoing trial of Sam Bankman-Fried, the former CEO of FTX accused of siphoning off investors’ assets.
FTX’s creditors fire against the deal
FTX’s creditors have remained opposed to this settlement because of the terms that were removed from it. FTX’s creditors have demanded nearly $4 billion consisting of $1.6 billion in assets withdrawn by FTX’s crypto lender and a payment of $1.8 billion by FTX used to service the loans.
In August, the agreed creditors moved under FTX’s Official Committee of Unsecured Creditors to oppose the deal which it described as worst deal so far due to the drop from $3.9 billion to $175 million.
“Genesis’ claims are currently worth more than FTX’s, even though Genesis’ lenders’ balances are inflated by the interest they earned on loans to, among others, Alameda.”
The company claims the funds rightfully belong to FTX shareholders and creditors, but some crypto users question the nature of the deal.
FTX creditors are not alone
Other groups have also distanced themselves from the deal by vehemently opposing it, describing it as a move to get FTX votes in the Genesis bankruptcy case.
Last month, Creditors Genesis accused the company plans to manipulate the voting process and cannot be taken at face value, they argued in a court filing.
“(Gênesi’s) proposed agreement with FTX is an attempt to manipulate the plan voting process … an agreement prior to the estimated plan.”
They claim that the company is looking for FTX’s support and votes, which is clear”perversion of the Chapter 11 process.”