Genesis Global
Crypto lender Genesis Global has received approval to return around $3 billion in cash and cryptocurrency to its customers. This is part of its bankruptcy liquidation process. The company’s owner, Digital Currency Group (DCG), will not get any recovery from this bankruptcy.
Court Approval and Objections
On Friday, U.S. Bankruptcy Judge Sean Lane approved Genesis’ Chapter 11 liquidation plan. DCG had argued that Genesis should pay customers and creditors based on the crypto assets’ value from January 2023. At that time, Genesis filed for bankruptcy, and crypto prices were much lower. For example, Bitcoin was worth $21,084 in January 2023 but now is valued at $67,000.
DCG wanted customer claims to be capped at these lower values, but Judge Lane overruled this objection. He stated that even if customer claims were capped at the lower prices, Genesis would still need to pay other creditors, including federal and state financial regulators, who have asserted $32 billion in claims. Therefore, there would be no assets left to provide any recovery to DCG.
Disagreement on Valuation
Genesis and DCG disagreed on who should benefit from the rise in cryptocurrency prices. Genesis’ attorney, Sean O’Neal, said on Friday that the company disagreed with DCG’s claim that customers could be paid “in full” based on the lower prices from January 2023. O’Neal emphasized, “We don’t buy into the idea that claims are capped at the petition date value.”
Repayment Plans
Genesis is trying to pay customers back in cryptocurrency where possible. However, the company does not have enough crypto to give back everything it owes. In February, Genesis estimated that it would be able to pay its customers up to 77% of the value of their claims, depending on future price changes.
Impact on Digital Currency Group
Digital Currency Group (DCG) will not receive any recovery from Genesis’ bankruptcy liquidation. The judge’s ruling and the significant claims by other creditors mean there are nowhere near enough assets to repay DCG. This situation highlights the impact of cryptocurrency price fluctuations on bankruptcy proceedings.
Customer Claims and Future Payments
Customers of Genesis can expect to receive payments in both cash and cryptocurrency. The amount they receive will depend on the future prices of cryptocurrencies. Genesis is committed to returning as much value as possible to its customers, despite the challenges posed by the limited crypto assets available.
Federal and State Financial Regulators’ Claims
Federal and state financial regulators have significant claims against Genesis, amounting to $32 billion. These claims take priority over any recovery for DCG, further reducing the chances of DCG receiving any assets from the bankruptcy process.
Wind Down
Genesis Global’s bankruptcy wind-down and the court’s approval of its Chapter 11 liquidation plan mark a significant step in returning funds to customers. Despite objections from DCG, the court ruled in favor of customers, allowing them to benefit from the rise in cryptocurrency prices since January 2023. Genesis is working to repay its customers as much as possible, though challenges remain due to the limited crypto assets available.
