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Home»BLOCKCHAIN NEWS»Genesis approves return of $3 billion to creditors
BLOCKCHAIN NEWS

Genesis approves return of $3 billion to creditors

By Crypto FlexsMay 19, 20244 Mins Read
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Genesis approves return of  billion to creditors
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Bankrupt cryptocurrency lending company Genesis Global Holdco received court permission on Friday to return about $3 billion in cash and cryptocurrency assets to creditors as part of its bankruptcy liquidation proceedings. U.S. Bankruptcy Judge Sean Lane made the decision.

Judge Sean Lane also dismissed an attempt by Digital Currency Group (DCG) to challenge the distribution plan for the debtor’s assets in the bankruptcy case.

DCG opposed the distribution plan, believing that repayments should be limited to the value of the cryptocurrency assets as of January 2023 (at the time of Genesis’ bankruptcy filing). Since then, the value of cryptocurrencies like Bitcoin has skyrocketed, with the price of Bitcoin skyrocketing from around $21,000 to its current price of nearly $67,000.

The company also argued that the plan provides too much revenue to creditors at DCG’s expense. In essence, DCG believes it is unfairly disadvantaged by the way its profits are distributed.

But DCG’s argument failed. Judge Sean Lane ruled that DCG’s financial interest as an equity holder was not directly affected by how the assets were distributed. Equity holders receive their money only after all creditors are satisfied.

Additionally, due to bankruptcy and significant creditor claims, DCG will not receive any distributions under this plan.

The total amount owed to creditors is billions of dollars higher than the debtor’s available assets. These claims have priority over equity holders such as DCG. This means that you will be paid first in case of bankruptcy.

The ruling also considered $32 billion in claims brought by federal and state financial regulators to take precedence over DCG’s shares.

Genesis previously estimated it could pay up to 77% of customer bills, a figure that could vary depending on future market fluctuations.

Genesis, which was hit hard by the collapse of Three Arrows Capital (3AC) and FTX, along with other lending platforms, faced liquidity issues during the 2022 market downturn. This ultimately led the company to file for Chapter 11 bankruptcy in January 2023.

Genesis’ creditors include several prominent names such as Gemini, Bybit’s Mirama, Decentraland, and VanEck.

In addition to the worries, Genesis Global Capital faced a legal lawsuit from the U.S. Securities and Exchange Commission (SEC). The SEC accused Genesis and Gemini of selling unregistered securities through Gemini Earn. The company reached a $21 million settlement with the SEC in March of this year.

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