Genesis, a bankrupt crypto lender, has reached an agreement to settle $1 billion in claims by the defunct crypto hedge fund Three Arrows Capital (3AC) for a payment of $33 million, according to court documents. The collapse of 3AC in June 2022 was seen as the first sign of a prolonged crypto winter, and its claims against Genesis relate to transfers made prior to the lender’s own bankruptcy in January. The deal, outlined in a filing on November 9, comes after extensive negotiations between the parties, and Genesis is now seeking approval from a New York bankruptcy court to settle the claims.
According to the document, “The 3AC Debtor shall receive an allowed general unsecured claim against Genesis in the amount of $33,000,000 in full and complete satisfaction of the more than $1 billion dollars in claims asserted against each of the Genesis Debtors.” It further states that the agreement will result in a mutual release of liability between the parties. In July 2022, Genesis had also filed $1.2 billion in claims against 3AC. The recent filing highlights that 3AC was one of Genesis’ largest borrowers from 2020 to 2022, until the time of its collapse.
A hearing to review the proposed settlement is scheduled for November 30. This development comes at a time when the crypto industry is facing increased scrutiny and regulatory challenges. The settlement between Genesis and 3AC could have implications for future cases involving bankrupt crypto lenders and their creditors. It remains to be seen how the court will respond to the agreement and whether it will be approved.
The collapse of 3AC earlier this year sent shockwaves through the crypto market and raised concerns about the stability of the industry. As the first major hedge fund to fail in the current crypto cycle, its demise served as a stark reminder of the risks involved in investing in the volatile and rapidly evolving world of cryptocurrencies. The fallout from 3AC’s collapse has reverberated throughout the industry, causing investors to reevaluate their strategies and prompting regulators to take a closer look at the risks associated with crypto lending.
Genesis, once a prominent player in the crypto lending space, has also faced its fair share of challenges. The lender’s own bankruptcy in January of this year was a significant blow to the industry, and its subsequent legal battles have further tarnished its reputation. The settlement with 3AC represents a step towards resolving some of these issues and moving forward.
The outcome of the hearing on November 30 will provide further insight into the legal and financial implications of the settlement. It will also shed light on the approach taken by the court in resolving disputes between bankrupt crypto lenders and their creditors. As the crypto industry continues to mature, cases like this will serve as important precedents for future legal proceedings and regulatory frameworks.
Overall, the settlement between Genesis and 3AC is a significant development in the world of crypto finance. It demonstrates the challenges faced by both lenders and borrowers in this rapidly evolving industry and highlights the need for robust risk management practices. As the crypto market continues to evolve, it is likely that we will see more cases like this, where bankruptcies and legal disputes become increasingly common. The outcome of the hearing on November 30 will provide valuable insights into the future of the industry and its ability to navigate these challenges.