Bankrupt crypto lender Genesis Global Capital has secured court approval to commence its $3 billion repayment plan to its creditors. The decision comes with revelations that Genesis’s parent company Digital Currency Group (DCG) will be recovering no value from the bankruptcy payout plan.
US Court Sides With Genesis, Denies DCG Claims On Repayment Plan
In a court ruling on Friday, Judge Sean Lane of the US Bankruptcy Court, Southern District of New York granted approval of the proposed repayment plan by Genesis to settle its debts with its claimants after filing for bankruptcy in January 2023.
Genesis Global Capital which functioned as a crypto lending platform was one major company to shut down following the sudden, spectacular collapse of mammoth crypto exchange FTX and its trading arm Alameda Research in November 2022.
According to a report by WSJ, Genesis reportedly lent millions of dollars to Alameda Research in unsecured loans prior to the company’s capitulation. In addition, Genesis also sent $2.4 billion to Three Arrows Capital, a crypto hedge fund which was ordered in June 2022 to undergo a liquidation.
In November 2023, Genesis submitted a repayment plan in which they targeted that each customer received at least 77% of the value of their deposits. This plan faced much opposition from the DCG – Genesis’s parent company – which claimed the proposed payout was going to grant customers more than they were entitled to, especially following general crypto asset appreciation in the last year.
However, Judge Lane kicked out DCG’s petition on Friday claiming they had no relevant stake in the repayment fund because they rank as junior creditors despite being an equity holder in the bankrupt crypto lender.
The Judge explained that DCG is likely to gain no sufficient value in funds or assets after Genesis is done settling its debts with its creditors including the state and federal regulators which takes a higher priority in the repayment hierarchy.
A statement from the ruling read;
In overruling DCG’s objection, the Court ultimately concludes that its objection is a result oriented one based on DCG’s lack of recovery as an equity holder under the Plan. But as discussed below, there are nowhere near enough assets to provide any recovery to DCG in these cases. In the end, DCG has not presented any basis for concluding that the New York Attorney General Settlement Agreement is anything but reasonable and appropriate.
Crypto Market Overview
At the time of writing, the total cryptocurrency market cap is valued at $2.27 trillion with a 0.25% decline in the last data based on CoinMarketCap.
Featured image from Business Day, chart from Tradingview.
Powered by WPeMatico
