Bankrupt crypto lender Genesis Global Capital has won court approval to launch its plan to repay $3 billion to its creditors. The decision comes alongside revelations that Genesis’ parent company, Digital Currency Group (DCG), will not recover any value from the bankruptcy repayment plan.
US court sides with Genesis, rejects DCG claims over repayment plan
In a court decision on FridayJudge Sean Lane of the U.S. Bankruptcy Court for the Southern District of New York approved Genesis’ proposed repayment plan to settle its debts with its plaintiffs after filing for bankruptcy in January 2023.
Genesis Global Capital, which operated as a crypto lending platform, was one of the main companies to shut down following the sudden and spectacular collapse of the massive crypto exchange FTX and its trading arm Alameda Research in November 2022.
According to a report According to the WSJ, Genesis allegedly loaned millions of dollars to Alameda Research in the form of unsecured loans before the company’s capitulation. Additionally, Genesis also sent $2.4 billion to Three Arrows Capital, a crypto hedge fund ordered to be liquidated in June 2022.
In November 2023, Genesis submitted a repayment plan in which it aimed for each customer to receive at least 77% of the value of their deposits. This plan was confronted a lot of opposition from the DCG – Genesis’ parent company – which claimed the proposed payment was going to give customers more than they were entitled to, especially after the general appreciation of crypto assets over the last year.
However, Judge Lane on Friday rejected the DCG’s motion, saying they had no relevant stake in the repayment fund because they classified themselves as junior creditors despite being shareholders of the bankrupt crypto lender.
The judge explained that DCG will likely not gain sufficient value in funds or assets once Genesis settles its debts with its creditors, including state and federal regulators, who have a higher priority in the repayment hierarchy.
A statement of the decision reads:
In rejecting DCG’s objection, the Court ultimately concludes that its objection is results-oriented and based on DCG’s lack of recovery as a shareholder of the Plan. But as noted below, the assets are nowhere near sufficient to provide any recovery to DCG in these cases. Ultimately, DCG has presented no basis for concluding that the New York Attorney General’s settlement agreement is anything but reasonable and appropriate.
Crypto Market Overview
At the time of writing, the total cryptocurrency market capitalization is valued at $2.27 trillion, with a decline of 0.25% over the last period. data based on CoinMarketCap.
Featured image of the business day, chart from Tradingview.
