Genesis Global secures court approval for $3B payout

News Feed - 2024-05-18 04:05:06

Amaka Nwaokocha1 hour agoGenesis Global secures court approval for $3B payoutAccording to Judge Lane, any available funds for distribution by Genesis are being exhausted by creditor claims, which take priority over DCG’s equity stake.337 Total views2 Total sharesListen to article 0:00NewsOwn this piece of crypto historyCollect this article as NFTJoin us on social networksBankrupt cryptocurrency lender Genesis Global has secured court approval to return about $3 billion in cash and cryptocurrency to its creditors. This decision leaves its parent company, Digital Currency Group (DCG), with no recovery from the bankruptcy.

Judge Sean Lane approved Genesis’s Chapter 11 repayment plan on Friday, May 17. The ruling clears the path for Genesis to unfreeze and return customer assets that have been locked up since the company halted withdrawals in November 2022 following the collapse of several major cryptocurrency firms.

However, Lane overruled an objection raised by DCG, which argued that Genesis should pay its customers and creditors no more than the value of the crypto assets in January 2023, when Genesis filed for bankruptcy. The price of Bitcoin (BTC) has increased significantly since then, from around $24,000 at the time to over $66,700 on May 17.

Lane dismissed DCG’s legal challenge, stating in a 135-page ruling that Genesis’ parent company lacked the legal standing to contest the Chapter 11 plan.

As a shareholder in Genesis, DCG holds a junior position in the repayment hierarchy under Chapter 11 proceedings. According to Lane, any available funds for distribution by Genesis are being exhausted by creditor claims, which take priority over DCG’s equity stake.

Due to the enormous creditor claims, Lane deemed DCG’s equity interest essentially valueless, with a multibillion-dollar shortfall.

Related:Digital Currency Group first-quarter revenue jumps 51% despite GBTC outflows

He dismissed DCG’s objection, ruling that even with capped customer claims, Genesis must prioritize paying numerous other creditors, including federal and state financial regulators, with $32 billion in claims before distributing any funds to DCG, its equity owner.

Genesis is one of multiple cryptocurrency lending firms affected by the massive crypto bear market of 2022. The lender filed for bankruptcy in January 2023 after suspending withdrawals following a liquidity crisis in mid-November 2022. The firm reportedly owes more than $3.5 billion to its top 50 creditors, including firms like Gemini.

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.

Genesis previously said in November 2023 that DCG agreed to pay its outstanding $324.5 million in loans by April 2024. The proposed deal aimed to allow Genesis to end a lawsuit filed against DCG in September that sought to have the firm repay overdue loans worth around $620 million.

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