Court Overrides DCG Challenge, Greenlights Genesis Global’s $3 Billion Repayment Plan
Genesis Global Capital has received court approval to distribute billions of dollars in digital assets and cash to its creditors, overcoming a legal challenge from its parent company, Digital Currency Group (DCG). This ruling paves the way for Genesis to release customer assets that have been frozen since November 2022.
After more than a year since filing for bankruptcy, Genesis Global Capital’s Chapter 11 repayment plan has finally been approved by Judge Sean Lane on May 17th. The plan includes a unique structure for returning Bitcoin and other cryptocurrencies to creditors. It has gained significant support from Genesis’ creditors and customers of the Gemini Earn program, which is a lending initiative run in partnership with Gemini Trust Co., founded by the Winklevoss brothers.
However, there was opposition to the repayment plan, particularly from Genesis’ parent company, Digital Currency Group. DCG argued that the increase in cryptocurrency prices should not benefit creditors at its expense. They believed that creditor claims should be based on crypto prices at the time of Genesis’ bankruptcy filing in early 2023, rather than the current higher prices. Genesis’ attorney, Sean O’Neal, disagreed with this argument and Judge Lane ultimately rejected DCG’s objection, stating that the parent company does not have the legal right to challenge Genesis’ Chapter 11 plan.
In his order, Judge Lane noted that DCG is “out of the money” as an equity holder by billions of dollars, emphasizing that Genesis’ creditors should be prioritized for repayment. The approved plan allows Genesis’ creditors to recover up to 77% of their claims.
Judge Lane also approved settlements related to Genesis’ Gemini Earn program. These settlements include redirecting assets to the wallets of former Gemini Earn customers who may have owed funds to state authorities. Another settlement with the US Securities and Exchange Commission was also confirmed, resolving another legal challenge faced by Genesis.
Overall, the court’s decision to approve Genesis’ Chapter 11 plan allows for the distribution of approximately $3 billion in cash and cryptocurrency to the company’s creditors and Gemini Earn program customers. Meanwhile, DCG, as the parent company, still has to recover from the bankruptcy as its claims are subordinate to those of Genesis’ creditors.
Tags: Crypto Regulations