Gemini

United

The clash between Digital Currency Group (DCG) and the New York Attorney General’s Office (NYAG) over a settlement involving DCG’s bankrupt subsidiary, Genesis, has taken a new turn. On February 21, DCG lodged a formal objection against the agreement, challenging its compliance with the Bankruptcy Code and raising concerns over its treatment of creditors and equity holders.<a href="https://cointelegraph.com/news/digital-currency-group-objects-subsidiary-genesis-settlement-nyag" rel="noopener noreferrer nofollow" target="_blank"> </a>
DCG’s main point of complaint lies with the settlement’s approach to compensating unsecured creditors, which is based on the asset valuation at the time of distribution. This method deviates from the traditional bankruptcy practice, which typically determines payments based on the asset valuation at the petition date. The objection points out that such a deviation not only contradicts the United States Supreme Court’s rulings, which uphold that settlements must not violate the Bankruptcy Code, but also potentially disadvantages secured creditors and equity holders, including DCG itself.
According to DCG, the settlement effectively sidelines them by allocating all residual value left in Genesis’ estate to unsecured creditors once they are paid. This move, DCG argues, deprives them of the fair opportunity to participate in the distribution of the estate’s remaining assets, undermining their position as a creditor and an equity holder. As the sole equity holder in Genesis, DCG’s stance is that of a secured creditor, a position they believe should afford them certain protections and considerations under the settlement.
DCG further criticizes the settlement for being hastily assembled and shrouded in secrecy, without adequate consideration of the claims’ merits or an attempt to secure the best possible deal for the estate. This, they suggest, indicates a lack of due diligence on Genesis’ part in evaluating options for resolving the claims and maximizing the estate’s value for all parties involved.
The objection emerges against the backdrop of a lawsuit filed by the NYAG against Genesis, DCG, and the crypto exchange <a href="https://www.cryptopolitan.com/gemini-monetize-gbtc-shares-for-earn-users/" data-type="post" data-id="468130" rel="noopener noreferrer nofollow">Gemini</a> in October. The lawsuit accuses the parties of defrauding investors through the Gemini Earn program, a partnership between Genesis and Gemini. Genesis’ suspension of withdrawals in November 2022 and subsequent bankruptcy filing in January 2023 further complicates the situation, raising questions about the company’s financial management and its implications for creditors and investors.

Digital Currency Group opposes Genesis’ NYAG settlement

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