Key Takeaways:
- Court Approval for Repayment: Genesis Global received court approval to return approximately $3 billion to its creditors, with its parent company, Digital Currency Group (DCG), receiving no recovery.
- Creditor Claims Priority: Judge Sean Lane ruled that creditor claims take precedence over DCG’s equity stake, rendering DCG’s interest valueless due to a significant shortfall.
- Unfreezing Customer Assets: Genesis can now unfreeze and return customer assets that were locked since November 2022 following the collapse of several major cryptocurrency firms.
Genesis Global, the bankrupt cryptocurrency lender, has received court approval to return approximately $3 billion in cash and cryptocurrency to its creditors, leaving its parent company, Digital Currency Group (DCG), with no recovery from the bankruptcy.
On May 17, Judge Sean Lane approved Genesis’s Chapter 11 repayment plan.
🚨 Bankrupt crypto lender #Genesis Global has received court approval to distribute approximately $3 billion to creditors.
— Satoshi Club (@esatoshiclub) May 18, 2024
The decision prioritizes creditor claims over the equity stake of its parent company, Digital Currency Group (DCG), which will receive no recovery.
This decision allows Genesis to unfreeze and return customer assets that have been locked since the company halted withdrawals in November 2022 after the collapse of several major cryptocurrency firms.
Judge Lane overruled DCG’s objection that Genesis should pay its creditors based on the value of the crypto assets in January 2023, when Genesis filed for bankruptcy.
At that time, Bitcoin was valued at around $24,000, compared to over $66,700 on May 17.
Lane’s 135-page ruling stated that DCG lacked the legal standing to contest the Chapter 11 plan.
As a Genesis shareholder, DCG holds a junior position in the repayment hierarchy.
Lane noted that creditor claims take precedence over DCG’s equity stake, effectively rendering DCG’s interest valueless due to a multibillion-dollar shortfall.
#Genesis Global Cleared to Unload $1.3 Billion in #GBTC Shares https://t.co/T3Miqm4152
— Bitcoin.com News (@BTCTN) February 14, 2024
Lane dismissed DCG’s objection, emphasizing that Genesis must prioritize paying numerous other creditors, including federal and state financial regulators with $32 billion in claims, before distributing any funds to DCG.
Genesis, one of several cryptocurrency lending firms affected by the 2022 crypto bear market, filed for bankruptcy in January 2023 after suspending withdrawals amid a liquidity crisis in November 2022.
The lender reportedly owes more than $3.5 billion to its top 50 creditors, including firms like Gemini.
Crypto lender Genesis Global received court approval to return about $3 billion in cash and cryptocurrency to its customers in a bankruptcy liquidation, leaving its owner, digital currency group, with no recovery from the bankruptcy.@SehgalRahesha reports pic.twitter.com/8cNtakkj8N
— WION (@WIONews) May 18, 2024
Genesis has been working to liquidate $1.6 billion of its assets after failing to reach settlements with DCG and its former business partner, Gemini.
In November 2023, Genesis announced that DCG had agreed to pay its outstanding $324.5 million in loans by April 2024.
This proposed deal aimed to settle a lawsuit filed against DCG in September, which sought repayment of overdue loans worth around $620 million.
Genesis’s repayment plan marks a significant step in the firm’s efforts to resolve its financial difficulties and return funds to its creditors.
About The Author
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