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Judge Sean Lane approved Genesis Global’s Chapter 11 plan on Friday, enabling the insolvent crypto lender to reimburse creditors approximately $3 billion in cryptocurrency and cash.
In a positive development for clients, the judge’s ruling facilitates the eventual return of frozen assets. Withdrawals have been suspended on the platform since November 2022, following the collapse of several prominent crypto companies.
Bloomberg reported that Judge Lane rejected Digital Currency Group’s (DCG) legal challenge, asserting that Genesis’ parent company did not possess the authority to dispute the Chapter 11 plan. As an equity stakeholder in Genesis, DCG is positioned last for repayment, as noted by Judge Lane. The judge emphasized that creditors take precedence over DCG and will not receive full repayment.
Genesis’ parent company, DCG, may contest Judge Lane’s ruling in court.
Bitcoin Surge Sparks Legal Dispute as Genesis and DCG Clash Over Profits
An increase in cryptocurrency values since Genesis’s bankruptcy filing has ignited a conflict between the lender and its parent company, DCG. Their dispute revolves around the allocation of the profits, with Bitcoin rising from approximately $21,000 in January 2023 to $67,000 today.
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On Friday, Genesis attorney Sean O’Neal countered DCG’s assertion that customers could receive payment “in full” given the lower cryptocurrency prices seen in January 2023.
“Considering the magnitude of the creditor claims, DCG is significantly out of the money as an equity holder by billions of dollars,” Judge Lane stated.
Bitcoin Stability Crucial for Genesis to Meet Creditors’ Claims in Bankruptcy
Genesis expects to be able to satisfy claims from at least 77% of its customers, contingent upon the stability of Bitcoin’s value. However, it also faces additional obligations to state and federal regulators amounting to $32 billion.
The majority of creditors owed money endorsed the lender’s bankruptcy plan. This includes participants in Gemini Earn. Genesis operated this lending initiative in collaboration with Gemini Trust Co., which is owned by the Winklevoss twins.
Genesis is focusing on returning cryptocurrency to customers whenever feasible. However, it does not possess sufficient cryptocurrency to fully repay all its debts.
In February, Genesis obtained approval to liquidate its Grayscale Bitcoin Trust (GBTC) shares valued at over $1.3 billion, as part of its efforts to reimburse customers.
The post Failed Crypto Lender Genesis to Disburse $3B to Creditors in Bankruptcy Case appeared first on Cryptonews.
