FTX Group is making moves to take back nearly $4 billion in cash and crypto from defunct lender Genesis Global Capital (GGC) and its affiliate GGC International.
According to court papers filed on Wednesday, these funds include almost $2 billion in loans and collateral handed to GGC by Sam Bankman-Fried’s Alameda Research and more than $1.62 billion that was withdrawn from FTX by the two firms before it went bust.
As detailed in the papers, “Genesis was one of the main feeder funds for FTX and instrumental to its fraudulent business model.
“At one point in 2021, GGC had over $8 billion of outstanding loans to FTX Debtor Alameda Research Ltd. Unlike other FTX creditors and customers, Genesis was largely repaid.”
As reported by Bloomberg, FTX is using bankruptcy rules originally laid out to make sure that certain creditors don’t receive preferential treatment.
If FTX gets its way, Gemini users could lose $900M
Obviously, if FTX does manage to claw this $4 billion, it will have a knock-on effect that could spell bad news for Genesis Global’s creditors.
Among these is the Winklevoss twins’ crypto exchange Gemini. Late last year, it was reported that users of the company’s Gemini Earn product were owed up to $900 million by GGC and its parent company Digital Currency Group.
In December, the Winklevii formed a committee of creditors to help recover lost funds. However, as pointed out on social media, if FTX has its way, it could scoop up Gemini Earn customers’ cash before they see a cent.