Genesis wins court approval for $3 billion repayment plan

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Bankrupt cryptocurrency lender Genesis Global Capital has received court approval to begin a $3 billion repayment plan to creditors. The decision comes amid the disclosure that Genesis’ parent company, Digital Currency Group (DCG), will not recover any value from the bankruptcy repayment plan.

A US court sides with Genesis and rejects DCG’s claims regarding the repayment plan

IN Friday’s court rulingJudge Sean Lane of the U.S. Bankruptcy Court for the Southern District of Novel York approved Genesis’ proposed repayment plan to settle its debts with creditors after filing for bankruptcy in January 2023.

Genesis Global Capital, which operated as a cryptocurrency lending platform, was one of the main companies to shut down following the sudden, spectacular collapse of giant cryptocurrency exchange FTX and its trading arm Alameda Research in November 2022.

According to report via WSJ Genesis reportedly lent Alameda Research millions of dollars in unsecured loans before the company capitulated. In addition, Genesis also sent $2.4 billion to Three Arrows Capital, a cryptocurrency hedge fund that was ordered to liquidate in June 2022.

In November 2023, Genesis presented a repayment plan in which it assumed that each customer would receive at least 77% of the value of their deposits. This plan was met with significant opposition from DCG – the parent company of Genesis – which claimed the proposed payout would provide customers with more than they were entitled to, especially after the general appreciation of crypto assets last year.

However, Judge Lane dismissed DCG’s petition on Friday, saying it did not have a fair share of the repayment fund because it was classified as a junior creditor despite being a shareholder of the failed crypto lender.

The judge explained that DCG would likely not gain sufficient value in funds or assets once Genesis completes settling its debts to creditors, including state and federal regulators, which has a higher priority in the repayment hierarchy.

The sentencing statement reads;

In dismissing DCG’s objection, the Court ultimately finds that its objection is performance-oriented and based on the failure of DCG to recover funds as a shareholder under the Scheme. However, as discussed below, in such cases the assets are not sufficient to provide DCG with any assistance. Ultimately, DCG provided no basis for concluding that the Settlement Agreement with the Novel York Attorney General was not reasonable or appropriate.

Cryptocurrency market overview

At the time of writing, the total market capitalization of cryptocurrencies is valued at $2.27 trillion, with a decline of 0.25% in the last year data based on CoinMarketCap.

Total market capitalization valued at $2.371 trillion on the daily chart | TOTAL chart in Tradingview

Featured image from the business day, chart from Tradingview.


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