Genesis Bankruptcy Plan: Excessive Payouts to Customers, DCG Reports
Digital Currency Group (DCG), the owner of crypto lender Genesis Capital, has raised objections to Genesis’ bankruptcy plan, arguing that it violates the Bankruptcy Code. DCG filed a motion on February 5th, stating that Genesis’ proposal to pay its customers more than their legal entitlement is problematic. The court filing also mentioned that DCG would support a plan that pays creditors in full, and the current assets are sufficient to do so. Genesis and its unsecured creditors devised a plan that would favor certain creditors, paying them hundreds of millions of dollars more than their claims, according to DCG.
DCG further stated that this plan disproportionately benefits a small group of creditors, violating the Bankruptcy Code. It would strip DCG of valuable economic and corporate governance rights, which is also against the Bankruptcy Code. As a result, DCG opposes this plan and requests that the court does not approve it. Genesis has been attempting to liquidate $1.6 billion worth of assets after failed settlements with DCG and its former business partner Gemini.
Genesis is just one of several cryptocurrency lending firms that have suffered due to the difficult cryptocurrency market in 2022. Following a liquidity crisis in mid-November of that year, Genesis suspended withdrawals and eventually filed for bankruptcy in January 2023. The company’s top 50 creditors, including Gemini, were owed more than $3.5 billion. On January 31, 2024, Genesis and its affiliates settled with the United States Securities and Exchange Commission (SEC) for $21 million.
The Genesis legal team aims to include the SEC settlement in its bankruptcy case and has proposed a hearing on February 14th. In November 2023, Genesis announced that DCG had agreed to repay its outstanding $324.5 million loan by April 2024, thus resolving a lawsuit filed by Genesis against DCG in September. This lawsuit sought repayment of overdue loans totaling approximately $620 million.
6 thoughts on “Genesis Bankruptcy Plan: Excessive Payouts to Customers, DCG Reports”
Leave a Reply
You must be logged in to post a comment.
Genesis should have been more responsible in managing its finances to avoid this bankruptcy situation. 🤦♀️
Genesis’ proposal to pay customers more than their legal entitlement is problematic and sets a dangerous precedent.
This bankruptcy case is a reminder that the cryptocurrency market is still highly volatile and unpredictable.
It’s unfair that Genesis and its affiliates settled for only $21 million with the SEC, while creditors are left with huge losses.
This bankruptcy plan seems unfair and unjust to other creditors.
It’s a positive step that Genesis resolved its lawsuit with DCG by agreeing to repay the loan. Hopefully, this will lead to a smoother resolution of their other legal matters. 🤝💼