Bankrupt crypto lender Genesis Global Capital received court approval for its plan to distribute billions of dollars in digital assets and cash to creditors
Judge Sean Lane announced late Friday that he would confirm Genesis' Chapter 11 repayment plan, which includes a unique structure for returning Bitcoin and other tokens to creditors. This decision paves the way for Genesis to return customer assets
Bankrupt crypto lender Genesis Global Capital received court approval for its plan to distribute billions of dollars in digital assets and cash to creditors, overcoming a legal challenge from its corporate parent Digital Currency Group.
Judge Sean Lane announced late Friday that he would confirm Genesis' Chapter 11 repayment plan, which includes a unique structure for returning Bitcoin and other tokens to creditors. This decision paves the way for Genesis to return customer assets that have been frozen on the platform since the firm suspended withdrawals in November 2022 after the collapse of other major crypto firms.
Judge Lane dismissed DCG's legal challenge, stating in a 135-page ruling that Genesis' parent company lacked legal standing to challenge the Chapter 11 plan. As Genesis's equity holder, DCG is last in line for repayment in Chapter 11, and Judge Lane stated that whatever value its bankrupt subsidiary has to distribute is being absorbed by creditors, who are not receiving full repayment, and are ahead of DCG.
"Given the size of the creditor claims, DCG is out of the money as an equity holder by billions of dollars," Judge Lane said.
DCG argued that the plan provides Genesis' creditors with an impermissible windfall at their expense. The parent company claimed that creditor claims should be based on the crypto prices at the time Genesis' subsidiary filed for bankruptcy in early 2023. At that time, Bitcoin was trading around $24,000, compared to more than$66,700 on Friday.
DCG can appeal Judge Lane's decision.
Genesis estimates that creditors who lent it digital assets could recover up to 77% under its proposal, and significantly less had DCG prevailed. The bankrupt lender's proposal enjoyed widespread support from its creditors, including customers of Gemini Earn, a lending program it operated jointly with the Winklevoss brothers' Gemini Trust Co.
