Genesis Faces $3.9B Claim by FTX

FTX is calling out avoidable transfers made before the company went bankrupt in November

article-image

mundissima/Shutterstock, modified by Blockworks

share

Bankrupt crypto exchange FTX is looking to reclaim nearly $3.9 billion in cash and cryptocurrency from fellow bankrupt lender Genesis Global and Genesis’ subsidiary GGC International as part of its plan to salvage value for creditors.

Court documents published May 3 claim that GGC had given loans worth almost $8 billion to Alameda Research and received most of the money back, while other creditors and customers of FTX haven’t received such repayments.

“Genesis was one of the main feeder funds for FTX and instrumental to its fraudulent business model,” attorneys for FTX wrote in the filing.

FTX is trying to recover funds connected to four dealings. Firstly, Alameda had repaid loans worth about $1.8 billion to GGC and pledged collateral to GGC. Then, GGC withdrew $1.6 billion worth of assets from FTX. Lastly, GGC withdrew $213 million worth of assets from FTX.

GGC’s business strategy involved collecting cryptocurrency from multiple lenders, channeling the loans to borrowers such as Alameda and earnings a profit through a net interest margin, according to the filing.

Attorneys for FTX said Genesis was “largely repaid” its nearly $8 billion in loans to Alameda, unlike other FTX creditors and customers.

FTX is now utilizing the power of bankruptcy laws to level the playing field for creditors involved. It’s calling out so-called avoidable transfers, which are somewhat like sneaky moves made in the 90 days prior to a company going bust. 

Legal representatives separately pointed out that FTX already has an ongoing comparable lawsuit to recoup payments in the Delaware Bankruptcy Court against Voyager, another debtor in Chapter 11 proceedings. As such, they have requested for the claims against Genesis to be handled similarly.

Blockworks earlier reported about the potential for FTX to use clawbacks in recovering its lost funds. Former securities law practice leader. The same practice was utilized for victims in the Bernie Madoff Ponzi scheme. 

Marc Powers, a former securities law practice leader for the firm that helped recover funds from the Madoff schemes, said FTX would follow a similar playbook to recover its lost funds.

Other potential sources of fund recovery include loans to other senior management at FTX and affiliates and assets owned by former CEO Sam Bankman-Fried.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates (19).png

Research

Suilend has grown into the top money market and liquid staking provider on Sui. STEAMM, Suilend’s Superfluid AMM, presents a compelling avenue for growing market share within Sui’s DEX landscape and revenue generation for the protocol. Suilend’s multi-product suite position it well for owning market share across key verticals. While current metrics across the Sui ecosystem are likely inflated due to Sui Foundation incentive programs, SEND trades at amongst the lowest multiples in the lend/borrow sector, suggesting that a bull case for continued growth in the ecosystem may be mispriced.

article-image

The stablecoin issuer now plans to offer 32 million Class A common stock shares at a price of up to $28 each

article-image

Let’s go whale watching, Bitcoin style: Investigating the mysterious “12ib7” wallet now worth $3.2 billion

article-image

Bitget’s L2 is undergoing a leadership change and will be helmed by Colin Goltra, formerly the blockchain’s chief growth officer

article-image

The funding was spread out across 61 rounds, a slight dip in both number of rounds and total funding in comparison to other months

article-image

Why is it controversial to say things are better than they used to be?

article-image

Wallchain could make influencer ROI more measurable for Solana businesses