Genesis is seeking court approval to settle with 3AC and propose a reduced claim.

Bankrupt crypto lender Genesis, a subsidiary of Digital Currency Group, has reached a settlement to resolve a $1 billion claim brought by now-defunct crypto hedge fund Three Arrows Capital (3AC). The filing cites the agreement as the result of “extensive negotiations” between the two parties.

The agreement outlines that 3AC will receive $33 million in allowed general unsecured claims against Genesis.

Genesis asks for 3AC claim to be reduced

Official documents show that both parties release each other from liability, with the Genesis debtors retaining any claims against DCG. The proposed settlement includes facilitating confirmation of its Chapter 11 reorganization plan.

The agreement is intended to expedite distributions under the plan and mitigate the risks, expenses and uncertainties associated with protracted litigation between the parties involved.

The Genesis Debtors assert that reaching the Settlement is fair, just, reasonable, and in the best interests of their estate and creditors. The Motion seeks the Court’s approval of the Settlement for the benefit of all relevant stakeholders.

“The entry into the Settlement Agreement reflects sound business judgment exercised by the Genesis Debtors and has been approved by a special committee of the Holdco Board of Directors, which, in consultation with the Debtors’ legal and financial advisors, considered the risks associated with litigation regarding the 3AC claims and concluded that the Settlement Agreement is in the best interests of the Genesis Debtors’ estate and its creditors.”

According to Genesis, 3AC’s $1 billion claim against the crypto lender is the most significant claim in the Chapter 11 case related to the FTX collapse. Genesis stressed that 3AC Debtors was one of Genesis’ most significant borrowers from 2020 to 2022 until Genesis’ collapse.

One Year After FTX Collapse

The news comes on the one-year anniversary of the collapse of the FTX exchange, which triggered a massive downturn in the industry. Genesis was one of the many companies affected by the FTX outage, facing problems accessing $175 million in funds locked on FTX.

While FTX made headlines for its potential resurgence boosting its native token FTT, founder Sam Bankman-Fried faced a bleak outcome. He was found guilty of all seven counts, including wire fraud, securities fraud, and conspiracy to launder money. #3AC  #Genesis