Bankrupt cryptocurrency bank Genesis Global Capital has received court approval to begin a $3 billion repayment plan for its creditors. This decision comes with the revelation that Digitalcurrency Group (DCG), Genesis' parent company, will not recover any value from the bankruptcy payout plan.
US court upholds Genesis and rejects DCG's claims on payment plan
in The court ruled on FridayJudge Sean Lin of the US Bankruptcy Court for the Southern District of New York granted approval to the payment plan proposed by Genesis to settle its debts with its claimants after filing for bankruptcy in January 2023.
Genesis Global Capital, which operated as a cryptocurrency lending platform, was one of the major companies to shut down following the sudden and stunning collapse of giant cryptocurrency exchange FTX and its trading arm Alameda Research in November 2022.
according to a report By the Wall Street Journal, Genesis reportedly loaned millions of dollars to Alameda Research in unsecured loans before the company surrendered. In addition, Genesis also sent $2.4 billion to Three Arrows Capital, a cryptocurrency hedge fund that was ordered in June 2022 to undergo liquidation.
In November 2023, Genesis introduced a payment plan in which it targeted each customer to receive at least 77% of the value of their deposits. This plan faced significant opposition from DCG – Genesis' parent company – which claimed that the proposed payment would give customers more than they are entitled to, especially after the general rise of crypto assets last year.
However, Judge Lin dismissed DCG's petition on Friday claiming that they do not have any relevant stake in the repayment fund because they are classified as junior creditors despite being equity holders in the bankrupt cryptocurrency lender.
The judge explained that DCG is unlikely to receive sufficient value for the money or assets after Genesis finishes settling its debts with its creditors including state and federal regulators who take higher priority in the repayment hierarchy.
The ruling statement stated:
In overruling DCG's objection, the court ultimately concluded that its objection was directed at achieving a finding based on DCG's lack of recovery as a stockholder under the plan. But as shown below, there are not enough assets to provide any recovery for DCG in these cases. Ultimately, DCG has provided no basis for concluding that the New York Attorney General's settlement agreement is not reasonable or appropriate at all.
Crypto market overview
At the time of writing, the total cryptocurrency market cap is $2.27 trillion with a decline of 0.25% in the past year. Data based on CoinMarketCap.
Featured image from Labor Day, chart from Tradingview.
The post Genesis Gains Court Approval For $3 Billion Repayment Plan first appeared on Investorempires.com.