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Genesis Global Capital filed for bankruptcy in January last year. Since then, the company has been in talks about the mode of payment. However, in a recent court hearing, it was approved to pay its creditors through digital assets.
In a recent court decision, cryptocurrency lender Genesis Global Capital has received court approval for its Chapter 11 repayment plan. It allows the distribution of billions of dollars in digital assets, including Bitcoin and other tokens, to creditors.
Lately, on Friday, Judge Sean delivered the ruling, marking a significant milestone in the bankruptcy process for the firm, which overcame a major challenge from its partner firm, Digital Currency Group (DCG).
<h2 class="wp-block-heading" id="strong-challenges-faced-by-genesis-capital-strong">Challenges Faced by Genesis Capital</h2>
Genesis Capital found itself in a tough situation after facing the fallout due to the collapse of several major crypto firms in 2022. It led to suspending customer withdrawals and the subsequent initiation of Chapter 11 bankruptcy proceedings.&nbsp;
The plan of payment that Genesis formulated is a novel approach to returning assets such as Bitcoin and other tokens to creditors that can effectively unfreeze funds that have been frozen on the platform for over a year.
However, Judge Lane’s decision confirms the repayment plan and dismisses DCG’s legal appeal. This decision asserted that the parent company lacked a statement while challenging the Chapter 11 proceedings.
In a comprehensive 135-page ruling, Judge Lane explained that DCG, being the equity holder in Genesis Global Capital, has the last right over the repayment schedule. There are substantial claims from the creditors above DCG in the list, contributing only a fraction of total capital.
Judge Lane stated, “Given the size of the creditor claims, DCG is out of the money as an equity holder by billions of dollars.”
<h3 class="wp-block-heading" id="strong-dcg-s-contradicting-statement-strong">DCG’s Contradicting Statement</h3>
DCG allegedly claimed that the repayment structure is unfair and is partial towards Genesis’s creditors at its own expense. It has been argued that the valuation of creditor claims should be based on the crypto prices at the time of the subsidiary’s bankruptcy filing in early 2023, when <a href="https://www.thecoinrepublic.com/2024/05/15/bitcoin-social-metrics-on-decline-will-btc-break-below-50k/" target="_blank" rel="noopener noreferrer nofollow">Bitcoin </a>traded at a significantly lower price of $24,000, which reached more than $66,500 on Friday. Despite the legal failure, DCG can still challenge the court’s decision.
<h3 class="wp-block-heading" id="strong-genesis-s-payment-to-creditor-strong">Genesis’s Payment to Creditor</h3>
The company estimated that creditors could recover up to 77% of their investments under its proposed plan, significantly more than the amount that creditors would have recovered if the court had approved DCG’s appeal.
Thus, the plan received tremendous support from creditors, including customers of Gemini Earn, a lending program operated jointly with Gemini Trust Co.
Apart from winning over DCG, Judge Lane also signaled approval for a settlement with New York Attorney General Letitia James, who had filed a lawsuit against Genesis over the Earn program. The settlement redirected assets that would have been allocated to state authorities back to former Earn customers, providing further relief to affected parties.
Moreover, Genesis had previously reached a separate settlement with the US Securities and Exchange Commission that resolved a distinct complaint related to the Earn program, which has been terminated.
The approval of Genesis Global Capital’s repayment plan and the resolution of legal disputes represent an important movement for the cryptocurrency industry, offering clarity and closure to stakeholders impacted by the firm’s failed journey.
Now, the journey for the repayment to the creditors begins. The company aims to navigate its way out of bankruptcy while restoring confidence in the stability and reliability of crypto lending platforms.

Genesis Global Won Legal Case Over DCG To Pay Creditors

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Thecoinrepublic.com

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