Gemini

2024

United

Venture capitalists Digital Currency Group (DCG) filed an objection on Feb. 21 to the settlement reached by its bankrupt subsidiary, crypto lender Genesis, with the New York Attorney General’s (NYAG) Office.
According to the objection, which is available only in redacted form, the NYAG settlement <a href="https://storage.courtlistener.com/recap/gov.uscourts.nysb.314889/gov.uscourts.nysb.314889.1341.0.pdf" target="_blank" rel="noopener noreferrer nofollow">bases</a> payments to unsecured creditors on asset valuation as of the distribution date, rather than providing them with payment based on the petition date, as required by the Bankruptcy Code. The United States Supreme Court has ruled that a court cannot allow a settlement to violate the Bankruptcy Code, the objection stated.
<figure><img src="https://s3.cointelegraph.com/uploads/2024-02/88d3e4a5-e0fb-44cf-ae46-d9ffe86de51b.png" alt="" title="">
 <figcaption style="text-align: center;">A page from the DCG objection to the Genesis settlement with the NYAG. Source: CourtListener
 </figcaption>
</figure>
Furthermore, the settlement “simply hands over to the NYAG (and ultimately unsecured creditors) all residual value left in the Debtors’ estates after unsecured creditors are paid,” which “would rob DCG, a creditor and equity holder, of a fair opportunity to participate in the waterfall under the Debtors’ plan” by “literally directing the disposition of the Debtors’ residual assets after satisfaction of the unsecured creditors’ claims.”
Under the settlement, the NYAG <a href="https://cointelegraph.com/news/new-ny-attorney-general-filings-case-genesis-gemini" rel="noopener noreferrer nofollow">would receive payment on its claims</a> only after unsecured creditors had been paid. As the sole equity holder in Genesis, DCG is a secured creditor.
Related: <a href="https://cointelegraph.com/news/genesis-bankruptcy-gbtc-outflows-bitcoin-coinbase-crypto-exchange" rel="noopener noreferrer nofollow">Genesis GBTC sell-off will balance out in crypto market — Coinbase</a>
Genesis has not met its responsibilities to all creditors, DCG said. Its subsidiary must show that it “considered the merits of the claims, evaluated options for resolving those claims, sought the best deal for the estate, and initiated arm’s length negotiations to maximize the value of the estate as a whole.” According to a statement by DCG provided to Cointelegraph:
<blockquote>
 “DCG objects to this subversive arrangement, put together last-minute and in secret, which seeks to redistribute all estate value to preferred creditors who would have already received the full value of their claims.”
</blockquote>
The deficiencies are signs that the debtors did not sufficiently take into account the possibility of prevailing against NYAG claims in court, according to the objection. DCG requested that the court withhold approval of the settlement until its objections are addressed.
<blockquote class="twitter-tweet">
 Barry Silbert objects “additional payouts” to Genesis creditors - Digital Currency Group (DCG) has raised objections against the settlement reached between the New York Attorney General and Genesis, a crypto lender within DCG’s portfolio of digital asset businesses that rece... <a href="https://t.co/4VUCROzmfH" rel="noopener noreferrer nofollow">pic.twitter.com/4VUCROzmfH</a>— The Industry Spread (@industryspread) <a href="https://twitter.com/industryspread/status/1760745055579484657?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">February 22, 2024</a>
</blockquote>
DCG <a href="https://cointelegraph.com/news/genesis-bankruptcy-plan-overpays-claims-dcg" rel="noopener noreferrer nofollow">made similar objections to</a> the Genesis bankruptcy plan.
The NYAG <a href="https://cointelegraph.com/news/gemini-genesis-dgc-sued-by-new-york-attorney-general-for-allegedly-defrauding-investors" rel="noopener noreferrer nofollow">sued Genesis along with DCG</a> and crypto exchange Gemini in October, charging that the defendants defrauded investors through the Gemini Earn program, which Genesis ran in partnership with Gemini. Genesis <a href="https://cointelegraph.com/news/breaking-crypto-lender-genesis-global-halts-withdrawals" rel="noopener noreferrer nofollow">suspended withdrawals in November 2022</a> and <a href="https://cointelegraph.com/news/crypto-lender-genesis-files-for-bankruptcy" rel="noopener noreferrer nofollow">filed for bankruptcy in January 2023</a>.
Magazine: <a href="https://cointelegraph.com/magazine/deposit-risk-crypto-exchanges-money/" rel="noopener noreferrer nofollow">Deposit risk: What do crypto exchanges really do with your money?</a>

Digital Currency Group objects to subsidiary Genesis’ settlement with NYAG

Cointelegraph

Other articles published on Feb 22, 2024

Grayscale Investments Files For Privacy ETF With Emphasis on ZCash

5 AI coins to consider as SingularityNet and Worldcoin surge

🎁 Event | Join the NFTScan × Redotpay Collaboration Event and win a Redotpay Payment Card!

Ethereum Layer 2 Tokens Poised for Pump? Here Are the Targets

Shiba Inu (SHIB) Burn Rate Soars 8,511% as Bulls Push for Price Rebound

Binance Labs invests in EigenLayer restaking protocol Renzo

Join our free newsletter for daily crypto updates!