Genesis Global gets court approval for $3B settlement
Bankrupt cryptocurrency lender Genesis Global has received court approval to return nearly $3 billion in cash and cryptocurrency to its creditors. This decision does not indemnify its parent company Digital Currency Group (DCG) from bankruptcy.
Judge Shawn Lane approved Genesis' Chapter 11 payment plan on Friday, May 17. The ruling clears the way for Genesis and the company to release and return customer assets that were locked up following the November 2022 collapse of several major cryptocurrency companies.
However, Lane rejected objections raised by DCG, which said Genesis should not pay its customers and creditors more than the value of its crypto assets when Genesis files for bankruptcy in January 2023. Since then, the price of Bitcoin (BTC) has risen sharply, from around $24,000 at the time to over $66,700 on May 17.
In a 135-page ruling, Lane rejected DCG's legal challenge, arguing that Genesis' parent company lacked legal standing to challenge the Chapter 11 filing.
As a shareholder in Genesis, DCG occupies a smaller position in the payment hierarchy during the Chapter 11 process. According to Lane, any cash available for distribution at Genesis is being drained by creditors' claims, which take precedence over DCG's equity stake.
Because of the huge amount of creditor claims, Lane's equity interest in DCG was essentially worthless with a multi-billion dollar deficit.
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Rejecting DCG's objections, despite customer claims, Genesis decided it must prioritize paying several other creditors, including federal and state financial regulators, on $32 billion in claims before distributing any money to equity owner DCG.
Genesis It is one of the many cryptocurrency lending firms affected by the massive crypto bear market of 2022. The creditor It filed for bankruptcy in January 2023 after ceasing withdrawals due to liquidity problems in November 2022. The company reportedly has more than $3.5 billion in debt. 50 lenders, including firms such as Gemini.
Genesis is working to liquidate $1.6 billion in assets after failing to reach an agreement with DCG and its former business partner Gemini.
Genesis was previously published in November 2023 DCG. It said it has agreed to repay the $324.5 million loan in April 2024. The proposed settlement is to allow Genesis to drop a lawsuit filed against DCG in September, which requires the company to repay an estimated $620 million in loans. .
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