Judge rules Genesis Global can distribute billions to creditors

Exciting news for Genesis Global! The digital assets lender that faced tough times last year has received the green light from the court to settle debts in cash and crypto with its creditors.

As reported by Bloomberg, Judge Sean Lane from the Southern District of New York gave the thumbs up to Genesis’ repayment plan under Chapter 11, outlining how crypto assets will be returned to those waiting.

This long-awaited decision sets the stage for Genesis to finally release customer assets that have been stuck on the platform since withdrawals were put on hold back in November 2022.

Judge Lane also dismissed challenges from Genesis Global’s parent company, Digital Currency Group (DCG), ruling that they could not contest the Chapter 11 plan. DCG will have to wait until the end to receive any repayments as per the rules.

Considering the overwhelming creditor claims, it’s been determined that DCG’s equity stake in Genesis is essentially worthless, revealing a significant deficit.

DCG argued that the plan favored Genesis creditors unfairly and suggested that claims should be based on crypto prices from January 2023 when the bankruptcy was filed. Bitcoin was a mere $24,000 then, now it’s flying high at over $66,000!

However, the judge stood firm and emphasized the importance of settling obligations to other creditors, such as federal and state financial regulators with claims totaling $32 billion, before addressing DCG’s concerns.

Genesis was just one of many crypto lending businesses hit hard by the turbulent market conditions in 2022. Withdrawals were halted due to financial strains in November, with debts exceeding over $3.5 billion to top creditors, including former partner Gemini.

Following the bankruptcy filing, Genesis has been working to liquidate assets worth $1.6 billion after unsuccessful negotiations with DCG and Gemini.

In a positive turn of events, the crypto lender announced in November 2023 that its parent company agreed to settle a loan of $300 million by April. This move aimed to address a lawsuit filed by Genesis seeking repayment of overdue loans worth approximately $620 million.

While DCG may not be pleased with the outcome, Genesis creditors have voiced their approval. They are set to recover up to 77% under the proposed plan, a much better outcome compared to what DCG had in mind.

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