Monday, 17 June 2024
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Genesis to return $3B to customers after court approves bankruptcy plan

Genesis to return $3B to customers after court approves bankruptcy plan

  • Genesis Global gets court approval to repay $3 billion to customers.
  • Judge Sean Lane overruled an objection from Genesis parent company Digital Currency Group.
  • DCG argued payments to be in US value of assets as of bankruptcy filing in January 2023.

Genesis Global has secured court approval to return $3 billion in cash and crypto to its creditors, details in a recent court filing show. The payouts will represent about 77% of customers’ claims.

However, the payout doesn’t include Digital Currency Group (DCG), the parent company of Genesis Global.

The development comes after US Bankruptcy Judge Sean Lane approved the Chapter 11 bankruptcy plan Genesis Global and its subsidiaries filed in January 2023. Genesis’ bankruptcy followed the collapse of Three Arrows Capital and FTX in 2022.

Judge overrules DCG objection

As noted above, the plan to return billions of dollars worth of crypto assets and cash to Genesis creditors has received a node from Judge Sean Lane. 

On Friday, the judge overruled DCG’s objection to the liquidation plan, paving way for this significant step in the right direction for creditors. 

In their argument, DCG had argued that Genesis should pay customers as per the value of their crypto assets at the time the company filed for bankruptcy.

In dismissing DCG’s objections, Judge Lane noted:

The record here clearly establishes that there is not sufficient value in the Debtors’ estates to provide DCG a recovery as equity holder after unsecured creditors are paid… Given the size of the creditor claims, DCG is out of the money as an equity holder by billions of dollars, even if the Court valued creditor claims using the method DCG proposes.”

When Genesis filed for Chapter 11, customer claims by the top 50 creditors was over $3.5 billion. The court’s approval of the liquidation plan will see approximately 97% of reimbursements handled in-kind.

This means a customer who deposited BTC will receive payout in BTC and not the equivalent US dollar value.

Genesis to return crypto to customers beginning next month

At current prices, customer claims for Bitcoin or Ethereum are trading at 97-110% for claims amounting to over $10 million. Claims under $1 million are trading at 74-94%. In comparison, the claims traded at 35% at the time the crypto lender filed for bankruptcy.

For stablecoins, its 89-91% for claims of…

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