Share this article
Bankrupt crypto lending company Genesis Global Holdco received court permission to return approximately $3 billion in cash and crypto assets to its creditors as part of its bankruptcy liquidation process on Friday. US Bankruptcy Judge Sean Lane made the decision.
In addition, Judge Sean Lane rejected Digital Currency Group’s (DCG), attempt to challenge the distribution plan for the debtors’ assets in the bankruptcy case.
DCG objected to the distribution plan as it believes repayments should be capped at the crypto asset values of January 2023 (at the time of Genesis’ bankruptcy filing). Since then, the value of cryptos like Bitcoin has surged, with Bitcoin’s price jumping from around $21,000 to a current value of nearly $67,000.
The firm also claimed that the plan provides too much return to creditors at DCG’s expense. Essentially, DCG feels that it is unfairly disadvantaged by how the returns are allocated.
However, DCG’s arguments failed. Judge Sean Lane ruled that, as an equity holder, DCG’s financial interest isn’t directly impacted by how the assets are distributed. Equity holders only get paid after all creditors are satisfied.
Additionally, given the insolvency and the massive creditor claims, DCG won’t receive any distribution under this plan.
The total amount owed to creditors is billions of dollars higher than the debtors’ available assets. These claims have priority over equity holders like DCG, meaning they get paid first in line during bankruptcy.
The ruling also considered the substantial $32 billion in claims from federal and state financial regulators, prioritizing them over DCG’s equity stake.
Genesis had previously estimated that it could pay up to 77% of the value of customer claims, a figure subject to future market fluctuations.
Hit hard by the collapse of Three Arrows Capital (3AC) and FTX, Genesis – along with other lending platforms – faced liquidity issues during the 2022 market downturn. This ultimately led the company to file for Chapter 11 bankruptcy in January 2023.
Genesis’ creditors include several prominent names, such as Gemini, Bybit’s Mirama, Decentraland, and VanEck.
Adding to its troubles, Genesis Global Capital faced a legal lawsuit from the US Securities and Exchange Commission (SEC). The SEC accused Genesis and Gemini of selling unregistered securities through Gemini Earn. The company reached a $21 million settlement with the SEC in March this year.
Share this article
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
Crypto Briefing may augment articles with AI-generated content created by Crypto Briefing’s own proprietary AI platform. We use AI as a tool to deliver fast, valuable and actionable information without losing the insight – and oversight – of experienced crypto natives. All AI augmented content is carefully reviewed, including for factural accuracy, by our editors and writers, and always draws from multiple primary and secondary sources when available to create our stories and articles.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
Source link
