%1

Juul Labs Inc. on Friday secured preliminary court approval of a $255 million settlement resolving claims by consumers that it deceptively marketed e-cigarettes, as the company seeks to resolve thousands of lawsuits, Reuters reported. U.S. District Judge William Orrick in San Francisco said that the proposed class action settlement resolving claims by consumers who said they overpaid for Juul's vaping products was "fair, reasonable, and adequate," according to a court filing. The settlement is part of a larger, global agreement by Juul to resolve thousands of lawsuits by school districts, local governments and individuals accusing it of contributing to a youth vaping epidemic. The company last month said it had reached settlements with about 10,000 plaintiffs covering more than 5,000 cases. It has not said how much it will pay, though the Wall Street Journal reported deal is valued at $1.7 billion. The class action settlement resolves claims by people who say they would have paid less, or not bought the e-cigarettes at all, if Juul had not downplayed the products' addictiveness and appealed to teenagers through social media campaigns and other means.

The lending unit of crypto firm Genesis filed on Thursday for U.S. bankruptcy protection from creditors, toppled by a market rout along with the likes of exchange FTX and lender BlockFi, Reuters reported. Genesis Global Capital, one of the largest crypto lenders, froze customer redemptions on Nov. 16 after FTX stunned the financial world with its bankruptcy, fueling concern that other companies could implode. The company is owned by venture capital firm Digital Currency Group (DCG). Genesis' lending unit said it had both assets and liabilities in the range of $1 billion to $10 billion, and estimated it had over 100,000 creditors in its filing with the U.S. Bankruptcy Court for the Southern District of New York. Genesis Global Holdco, the parent group of Genesis Global Capital, also filed for bankruptcy protection, along with another lending unit Genesis Asia Pacific. Genesis Global Holdco said in a statement that it would contemplate a potential sale or a equitization transaction to pay creditors, and that it had $150 million in cash to support the restructuring. It added that Genesis' derivatives and spot trading, broker dealer and custody businesses were not part of the bankruptcy process, and would continue their client trading operations.

FTX’s new chief executive, John J. Ray III, said he is looking into the possibility of reviving the bankrupt crypto exchange as he works to return money to the failed company’s customers and creditors, WSJ Pro Bankruptcy reported. In his first interview since taking over FTX in November, Ray said that he has set up a task force to explore restarting FTX.com, the company’s main international exchange. Although top FTX executives have been accused of criminal misconduct, some customers have praised its technology and suggested that there would be value in rebooting the platform, he said. “Everything is on the table,” Ray said. “If there is a path forward on that, then we will not only explore that, we’ll do it.” FTX’s bankruptcy filing marked the largest of several failures of cryptocurrency platforms last year that froze millions of users’ access to their accounts. FTX, Celsius Network LLC, Voyager Digital Ltd. and BlockFi Inc. have used the chapter 11 process to explore restarting their businesses and selling their platforms to stronger rivals. Another option is to simply close up shop and return crypto holdings to customers as quickly as possible. Ray said that he would look into whether reviving FTX’s international exchange would recover more value for the company’s customers than his team could get from simply liquidating assets or selling the platform.

Genesis Global Capital is laying the groundwork for a bankruptcy filing as soon as this week, Bloomberg News reported. The cryptocurrency lending unit of Digital Currency Group has been in confidential negotiations with various creditor groups amid a liquidity crunch. It has warned that it may need to file for bankruptcy if it fails to raise cash, Bloomberg previously reported. Financial pressure at Barry Silbert's DCG began to emerge after the collapse of hedge fund Three Arrows Capital. Genesis suspended withdrawals in November, soon after crypto exchange FTX — where Genesis held some of its funds — filed for bankruptcy. The failures have had ripple effects on crypto exchange Gemini Trust, run by Cameron and Tyler Winklevoss. Gemini Earn — a service that lets Gemini's users get yield for lending out their coins through Genesis — stopped redemptions as well. Creditors, Genesis and DCG exchanged several proposals, but have so far failed to come to an agreement. Kirkland & Ellis and Proskauer Rose have been advising groups of creditors. DCG told shareholders that it's suspending quarterly dividends in an effort to conserve cash, according to a Jan. 17 letter to shareholders seen by Bloomberg.

The Roman Catholic Diocese of Norwich filed a reorganization plan on Tuesday to settle the Diocese’s chapter 11 reorganization case. One element of the plan is to sell the land where Saint Bernard School is located, Fox61.com reported. Part of the bankruptcy process, which has been going on for more than 18 months, is to create a fund to compensate survivors of abuse. Officials with the diocese said, "Under the proposed Plan, the Diocese and other entities will establish a Trust with funding in the amount of approximately $29 million. This Trust will provide financial restitution for survivors of sexual abuse who filed claims in the Diocese bankruptcy case." The diocese said over 140 claims of abuse were received before the deadline. Officials at Saint Bernard School said they learned the diocese is proposing to sell the entire parcel of land in Uncasville on which the school sits. It is expected that any proposed sale tentatively will include the option for the school to lease back the land, with favorable terms, for some period of time.

A U.S. judge on Wednesday said Robinhood Markets Inc. must face a lawsuit by customers who accused the online trading platform of fraudulently concealing their actual trading costs while promising "commission free" trades, Reuters reported. U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California, said customers in the proposed class action had standing to sue over securities they bought and sold on Robinhood's platform. Robinhood was accused of concealing how its business relied heavily on "payment for order flow," with the Menlo Park, California-based company collecting "unusually high" fees from outside broker-dealers who processed customer trades. Customers led by Ji Kwon, a Californian, said they ultimately bore these costs and often got worse prices on trades than if they had gone to rivals that charged commissions. They said this "materially undermined" Robinhood's duty to provide the best prices and execution on trades. Citing a recent ruling by the federal appeals court in Manhattan, Robinhood said the case should be dismissed because customers did not allege any misstatements about the issuers of their securities. But the judge rejected that argument in a Jan. 11 decision allowing investors to sue luxury electric car maker Lucid Group Inc. and said the same reasoning applied.

FTX said yesterday that a probe of its balance sheet showed holdings of customer funds were lower than the exchange’s internal accounts had indicated, acknowledging for the first time there was a shortfall of funds at the U.S. exchange, WSJ Pro Bankruptcy reported. It also disclosed that a hack two days after the company’s bankruptcy filing in November led to the theft of around half of the crypto assets stored on the U.S.-based exchange, valued at about $90 million before the company’s collapse. The same hacker took about $323 million of crypto from FTX’s international exchange, representing about 20% of that exchange’s total crypto assets. FTX also said that it found that a small group of individuals at the company had the ability to remove digital assets from the exchange without any record-keeping. “It has taken a herculean investigative effort from our team to uncover this preliminary information,” said FTX Chief Executive John J. Ray III, who has been leading the company since its bankruptcy filing. “We ask our stakeholders to understand that this information is still preliminary and subject to change. We will provide additional information as soon as we are able to do so.” The company said on Tuesday it identified $5.5 billion of liquid assets across its businesses, including $265 million of unrestricted cash — money that isn’t pledged as collateral or kept in custody for customers — at its U.S. businesses and around $273 million of unrestricted cash at the international exchange. It also identified around $3.5 billion of crypto assets as of Nov. 11, the day it filed for bankruptcy. Read more.

In related news, indicted FTX founder Sam Bankman-Fried later challenged aspects of the company's report in a blog post, Reuters reported. Bankman-Fried, who has been accused of stealing billions of dollars from FTX customers to pay debts incurred by his crypto-focused hedge fund, Alameda Research, pushed back against FTX's calculations late Tuesday, saying that the company's lawyers at Sullivan & Cromwell had presented an "extremely misleading" picture of the company's finances. Bankman-Fried said FTX has more than enough money to repay U.S. customers, whom he says are owed between $181 million and $497 million based on his "best guess." Bankman-Fried has not had access to FTX records since stepping down as CEO in November. Read more.

Investors are making higher offers for FTX customer accounts trapped in bankruptcy after lawyers for the failed cryptocurrency exchange said they have located $5 billion in cash and other liquid assets, WSJ Pro Bankruptcy reported. Bids on FTX accounts hit 15.5 cents on the dollar on Wednesday on the bankruptcy claims trading platform Xclaim Inc., which runs a market for buying and selling cryptocurrency accounts in chapter 11. Cherokee Acquisition, which runs a separate bankruptcy claims market, said bids on FTX claims increased to roughly 14 cents on the dollar this week after lawyers detailed their efforts to find and secure the company’s assets. The bids were still just a fraction of the accounts’ listed value, but they represented the highest offers since the cryptocurrency firm’s swift collapse in early November. FTX accounts had been priced at between 6 cents and 11.5 cents on the dollar since it plunged into chapter 11, according to Cherokee Acquisition. The uptick indicated some investors now believe recoveries might be slightly higher than previously expected for FTX’s roughly 9 million customer accounts. FTX lawyers disclosed on Wednesday that they have located $5 billion in cash and liquid assets and that they plan to sell hundreds of additional investment holdings with a book value of $4.6 billion. Read more. (Subscription required.)

The intersection of cryptocurrency and bankruptcy is one of the key issues to be discussed by expert panels at ABI's upcoming Rocky Mountain Bankruptcy Conference Jan. 26-27 in Salt Lake City. Are you registered?

FTX can put four key units including derivatives arm LedgerX and stock-clearing platform Embed up for sale, a Delaware bankruptcy judge ruled on Thursday, CoinDesk.com reported. Investment bank Perella Weinberg is now allowed to start the sale process, which also includes the crypto exchange’s European and Japanese units, and which have already attracted as many as 117 expressions of interest. In formal terms, the judicial decision allows bids, an auction, and a sales hearing to take place, with permission for any actual transaction to come later. U.S. Bankruptcy Judge John Dorsey charged with overseeing the wind-up of the exchange, approved the measures in an order dated Thursday after a hearing held Wednesday. Sale notices will be published within around three business days, with indications of interest to be received between Jan. 18 for Embed and Feb. 1 for FTX Europe and Japan.