The court has permitted Genesis Global to pay its creditors a total sum of approximately $3 billion in cash and cryptocurrency.
Judge Seán Lane handed down this ruling, highlighting Genesis Global’s financial strain. As a result of this judgment, Digital Currency Group (DCG), Genesis Global’s parent company, faces a bleak financial outlook.
Genesis Overcomes DCG Challenge in Bankruptcy Case
Judge Lane endorsed Genesis’s payback plan in Chapter 11 on May 17, restoring the ability to thaw and regain the customers’ assets. These assets have been in a lock-up situation since the fund halted withdrawals in late November 2022 after major global cryptocurrency firms crashed. The bankruptcy court’s decision rebuked an assertion by DCG that Genesis was not obliged to pay its customers and creditors in view of the fact that Genesis filed for bankruptcy in January 2023.
Also read: Genesis Reaches Agreement To Settle SEC Case for $21 Million
The judge considered the DCG’s lawsuit to be illegal, pointing out that Genesis’ parent company had not been formalized. In relation to Genesis, DCG, as its shareholder, will take the subordinate role in the repayment process administered under Chapter 11 proceedings. Per Lane’s opinion, the remaining assets of Genesis are going to pay its creditors before a distribution of dividends among equity shareholder who happens to be DCG.
Bankruptcy Judge Dismisses DCG Objection
Due to the enormous creditor claims, Lane deemed DCG’s equity interest essentially valueless, with a multibillion-dollar shortfall. He dismissed DCG’s objection, ruling that even with capped customer claims, Genesis must prioritize paying numerous other creditors, including federal and state financial regulators, with $32 billion in claims before distributing any funds to DCG, its equity owner.
Genesis filed for bankruptcy in January 2023 after suspending withdrawals following a liquidity crisis in mid-November 2022. The company reportedly owes more than $3. 5 billion to its top 50 creditors, including firms like Gemini. Genesis has been working to liquidate $1. 6 billion of its assets after failing to reach settlements with DCG and its former business partner, Gemini.
Also read: Federal Judge Rules SEC Lawsuit Against Gemini and Genesis To Proceed
In November 2023, Genesis stated that DCG had agreed to pay its outstanding $324. 5 million in loans by April 2024. The proposed deal aimed to allow Genesis to end a lawsuit filed against DCG in September, which sought to have the firm repay overdue loans worth around $620 million. September. It demanded that the firm return the loan late, which was worth nearly $620 million to them.
Cryptopolitan reporting by Mutuma Maxwell.
