The defunct cryptocurrency exchange FTX filed a motion on March 22nd seeking to enter into a settlement with Modulo Capital for the ongoing bankruptcy case that would see them receive $460 million in assets.
Previous reports claimed that Alameda Research, a primary market maker for the FTX, invested over $400 million in Madulo Capital. That was one of the biggest investments by FTX Group under the leadership of Samuel Bankman-Fried.
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The report by FTX alleged that Bankman-Fried directed transfers of $475 million to Modulo Capital in a series of investments that began in May 2022.
Modulo is a Bahamas-based hedge fund founded in 2022 and led by Xiaoyun “Lily” Zhang and Duncan Rheingans-Yoo, both of whom are acquaintances of FTX co-founder Bankman-Fried.
The report detailed that Alameda Research used the funds to buy 20% of Modulo’s Class A shares under a limited partnership agreement.
According to the court settlement, the agreement was reached after negotiations with the “Madulo Entities and their Principals.”
Upon the agreement, Modulo will pay $404 million in cash and give up $56 million in assets held on the FTX cryptocurrency exchange. The $460 million repayment represents 99% of the hedge fund’s remaining assets.
The Agreement is in the best interests of the Debtors’ creditors because it promptly brings approximately $460 million into the Debtors’ estates without time-consuming and costly litigation.
Clawback provisions in bankruptcy cases allow companies to recover some payments made to entities before filing for bankruptcy. The recovered funds can be redistributed to creditors.
At the beginning of the week, the leaked emails showed that FTX co-founder Sam Bankman-Fried made bold attempts to get the defunct crypto exchange licensed by the United States authorities before its collapse in November 2022.
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