Genesis Global can distribute billions to creditors: judge
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Genesis Global, the digital assets lender that went bankrupt last year, received court approval to pay billions in cash and crypto to creditors. According to Bloomberg, on May 17, Southern District of New York Judge Sean Lane confirmed Genesis’ Chapter 11 repayment plan, including a structure for returning crypto assets to creditors. This decision paves the way for Genesis to return customer assets locked on the platform since it paused withdrawals in November 2022. Bankrupt crypto lender Genesis won court approval of its plan to distribute billions of dollars in digital assets and cash to creditors, defeating a legal challenge brought by its corporate parent Digital Currency Group https://t.co/ekkzmu8mqk — Bloomberg Crypto (@crypto) May 17, 2024 Judge Lane also rejected a legal challenge from Genesis Global’s parent company, Digital Currency Group (DCG), stating that the company lacked the legal standing to dispute the Chapter 11 plan. As a Genesis equity holder, DCG will be the last to be repaid under Chapter 11 rules. Due to the substantial creditor claims, Lane ruled that DCG’s equity interest in Genesis is effectively worthless, highlighting a multibillion-dollar shortfall. The parent company had argued that the plan unfairly benefited Genesis creditors at its expense. It suggested that creditor claims should be based on the crypto prices when Genesis filed for bankruptcy in January 2023. Bitcoin (BTC) was trading at around $24,000 at the time. Today, it’s over $66,000. However, the judge dismissed this objection, noting that Genesis must prioritize other creditors, including federal and state financial regulators, with $32 billion in claims before distributing any funds to DCG. Genesis is one of several crypto lending firms impacted by the severe crypto market downturn of 2022. The company halted withdrawals due to a liquidity crisis in mid-November 2022. It reportedly owes over $3.5 billion to its…
Filed under: News - @ May 19, 2024 3:16 am