- Genesis Global Capital has received court approval to distribute billions in digital assets and cash to its creditors
- Judge Sean Lane last week confirmed Genesis’s Chapter 11 repayment plan with a unique structure for returning cryptocurrencies
- The ruling has allowed Genesis to distribute assets frozen since November 2022
Genesis Global Capital last week received court approval to distribute billions in digital assets and cash to its creditors, overcoming a legal challenge from its corporate parent, Digital Currency Group (DCG). On Friday, Judge Sean Lane confirmed Genesis’s Chapter 11 repayment plan, which features an innovative structure for returning bitcoin and other tokens to creditors. The ruling enables Genesis to proceed with the distribution of assets that have been frozen since the company paused withdrawals in November 2022, following the collapse of several major cryptocurrency firms.
DCG Likely to Get Nothing
DCG had argued that the repayment plan, which has seen a great deal of back and forth over the past year, unfairly benefited Genesis creditors at its expense, arguing that claims should have been based on cryptocurrency prices at the time of Genesis’s bankruptcy filing in early 2023.
At the time, Bitcoin was valued at around $24,000, contrasting shar sharply with Bitcoin’s trading value of over $66,700 on Friday.
In a comprehensive 135-page ruling, Judge Lane dismissed DCG’s legal challenge, stating that as an equity holder, DCG lacked the legal standing to oppose the Chapter 11 plan. He emphasized that DCG, being last in line for repayment, would not receive any value as the bankrupt subsidiary’s assets are insufficient to fully repay its creditors, which further explains DCG’s displeasure at the plan.
Despite the ruling, DCG retains the option to appeal Judge Lane’s decision.
Judge Lane Settles Other Issues
Genesis’s proposal estimates that creditors who lent digital assets could recover up to 77% of their claims, significantly more than they would have if DCG’s challenge had succeeded. The plan has garnered substantial support from Genesis’s creditors, including customers of Gemini Earn, a lending program operated in partnership with the Winklevoss brothers’ Gemini Trust Co.
Judge Lane also approved a related settlement with New York Attorney General Letitia James, who had sued Genesis over the Earn program. The settlement ensures that assets which might have gone to state authorities will instead be returned to former Earn customers.
Earlier, the bankruptcy judge sanctioned a separate settlement with the US Securities and Exchange Commission, concluding another complaint concerning the Earn program, which has since been terminated.
