Genesis Global Approved to Return $3 Billion to Customers
A Bankruptcy court has approved Genesis Global, a bankrupt cryptocurrency lender, to return approximately $3 billion in cash and cryptocurrency to its customers. Notably, the ruling leaves Genesis’ parent company, Digital Currency Group (DCG), without any recovery from the bankruptcy.
DCG Sidelined in Genesis Chapter 11 Plan
In a court filing on May 17, bankruptcy Judge Sean Lane approved the Chapter 11 liquidation plan for Genesis Global. The plan’s Distribution Principles are seen as a compromise, with US dollar creditors set to receive near-term distributions funded partially by monetizing certain digital assets. Digital asset creditors will receive “in-kind” distributions to the maximum extent possible.
- Judge Lane’s approval of the Chapter 11 plan
- Compromise in Distribution Principles
- US dollar and digital asset creditor distributions
Judge Lane also ruled that DCG lacked the legal standing to challenge the Chapter 11 plan. The Court highlighted that DCG, as an equity holder, is last in line for repayment, with creditors being prioritized over the parent company. Despite this, DCG has the option to file an appeal against the approval.
- DCG’s lack of legal standing
- Equity holder position
- Possibility of appeal
The Court’s decision also approved a settlement with the New York Attorney General Letitia James, who sued Genesis over its Earn program. This settlement ensures the return of assets to former Earn customers instead of them going to state authorities.
- Approval of settlement with Attorney General
- Asset return to Earn customers
- State authorities involvement
Genesis to Return Frozen Customer Assets
The Court’s decision enables Genesis Global to return customer assets that have been frozen since November 2022. The company, owned by DCG, was among several cryptocurrency lending firms that collapsed in 2022 and filed for bankruptcy in January 2023, owing over $3 billion to its top creditors, including firms like Gemini.
- Return of frozen customer assets
- Genesis’ bankruptcy background
- Debts owed to top creditors
Crypto Bankruptcies and Regulatory Scrutiny
The bankruptcy proceedings have involved major asset liquidations, such as the sale of 36 million Grayscale Bitcoin Trust (GBTC) shares worth over $1.65 billion earlier this year. Genesis Global’s former operations have garnered regulatory attention from the US SEC and other regulators.
- Asset liquidations in bankruptcy proceedings
- Sale of GBTC shares
- Regulatory scrutiny
Hot Take
Genesis Global, a bankrupt cryptocurrency lender, has been approved by a bankruptcy court to return approximately $3 billion in cash and cryptocurrency to its customers. The ruling sidelines Genesis’ parent company, Digital Currency Group (DCG), from any recovery in the bankruptcy process.
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