Genesis Global, a bankrupt cryptocurrency lender, has obtained court permission to reimburse its creditors with almost $3 billion in cash and cryptocurrency. Due to this ruling, Digital Currency Group (DCG), the parent firm, will not be able to emerge from bankruptcy. On Friday, May 17, Judge Sean Lane gave his approval to Genesis’ Chapter 11 repayment plan. The decision makes it possible for Genesis to unlock and refund customer assets that were locked up after it stopped accepting withdrawals in November 2022 due to the failure of other significant cryptocurrency companies.
Lane did, however, reject a protest by DCG, which contended that Genesis should only reimburse its clients and creditors for the amount of its cryptocurrency holdings at the time of its bankruptcy filing in January 2023. The cost of one Bitcoin (BTC) $66,805 tickers downward has substantially expanded since then, rising from over $24,000 to over $66,700 on May 17. In a 135-page decision, Lane rejected DCG’s legal appeal, finding that the parent company of Genesis lacked the necessary legal standing to dispute the Chapter 11 plan.
DCG is a Genesis stakeholder and is ranked lower in the repayment hierarchy under Chapter 11 proceedings. Lane contends that creditor claims are consuming any funds that Genesis may have available for distribution, and that these claims take precedence over DCG’s equity holding. Lane declared DCG’s ownership investment almost worthless, with a multibillion-dollar deficit, as a result of the massive creditor demands.He rejected DCG’s challenge, stating that Genesis must pay many other creditors, including state and federal financial regulators, $32 billion in claims before releasing any money to DCG, its equity owner, even with capped customer claims. The significant 2022 cryptocurrency bear market has an impact on several loan companies, including Genesis. Following a liquidity issue in mid-November 2022, the lender suspended withdrawals and filed for bankruptcy in January 2023. According to reports, the company owes its top 50 creditors, which include companies like Gemini, more than $3.5 billion.
Genesis has been trying to sell off $1.6 billion worth of its holdings since it was unable to come to an agreement with DCG and Gemini, its previous business partner. Genesis reported in November 2023 that DCG has committed to repay its $324.5 million in outstanding loans by April 2024. The goal of the proposed agreement was to enable Genesis to settle a lawsuit that it had filed against DCG in September, which demanded repayment of past-due debts totaling approximately $620 million.