Digital Currency Group Opposes Genesis Payment Plan
Digital Currency Group (DCG) has objected to its collapsed subsidiary Genesis’ plan to repay customers, citing concerns that some former clients would receive an excessive amount of money. DCG, a crypto behemoth that operated Genesis, filed court documents on Monday outlining its objections to the payment plan.
Genesis was a crypto lender that went bankrupt last year, leaving clients waiting for their funds. DCG initially stated that creditors would be fully reimbursed. However, the recent filing argues that the proposed plan unfairly favors a select group of creditors and requests the court’s disapproval.
The primary issue is that certain creditors would receive more than the value of their claims in US dollars due to the appreciation of digital assets like Bitcoin and Ethereum since Genesis’ collapse.
Genesis’ Troubles and Lawsuit
Genesis encountered difficulties in November 2022 when it provided substantial loans to struggling crypto firms such as Three Arrows Capital and Alameda Research. These firms were on the verge of defaulting on their debts following the collapse of TerraUSD and market contagion. In response, Genesis paused withdrawals indefinitely due to “unprecedented market turmoil.”
In January 2023, the Securities and Exchange Commission (SEC) filed a lawsuit against Genesis for allegedly conducting an unregistered securities offering, raising billions from hundreds of thousands of investors. The company subsequently filed for bankruptcy.
Hot Take: DCG Challenges Genesis Payment Plan Over Unequal Distribution
Digital Currency Group’s opposition to Genesis’ payment plan highlights concerns regarding unequal distribution among creditors. The current proposal disproportionately favors a select group of creditors who would receive more than the value of their claims in US dollars due to the appreciation of digital assets. DCG argues against approving this plan and urges the court to intervene.
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