Crypto lender Genesis Global received court approval on Friday to return approximately $3 billion in cash and cryptocurrency to its customers as part of its bankruptcy liquidation, with its owner, Digital Currency Group (DCG), not recovering any funds from the bankruptcy.
U.S. Bankruptcy Judge Sean Lane approved Genesis’ Chapter 11 liquidation plan, dismissing an objection from DCG. DCG had argued that Genesis should reimburse its customers and creditors based on the cryptocurrency values from January 2023, when Genesis filed for bankruptcy.
Since Genesis filed for bankruptcy, crypto prices have surged. For instance, Bitcoin was valued at $21,084 in January 2023 but has now risen to $67,000. This rise in prices caused a disagreement between DCG and Genesis over who should benefit from the increase.
Judge Lane dismissed DCG’s objection, stating that even if customer claims were limited to the lower January prices, Genesis would still need to pay many other creditors, including federal and state financial regulators, who have claimed $32 billion, before any funds could be given to DCG.
“There are nowhere near enough assets to provide any recovery to DCG in these cases,” Lane wrote.
Genesis aims to repay customers in cryptocurrency where possible, though it doesn’t have enough to cover all its debts. Genesis attorney Sean O’Neal said on Friday that the company disagreed with DCG’s view that customers could be paid “in full” based on the lower January 2023 cryptocurrency prices.
“We don’t accept the notion that claims are capped at the value on the petition date,” O’Neal said.
In February, Genesis estimated it could pay customers up to 77% of the value of their claims, depending on future cryptocurrency price changes.
DCG could not be reached for comment late Friday.
Summary Review: The court’s decision marks a significant step forward in the bankruptcy proceedings of Genesis Global. By prioritizing the repayment of customers over the recovery of the parent company, Digital Currency Group, the ruling seeks to address the immediate financial needs of Genesis’ customers. However, the outcome underscores the volatile nature of cryptocurrency markets and the complexities involved in valuing digital assets during bankruptcy. As Genesis works to fulfill its obligations, the situation highlights the ongoing challenges in the crypto lending space and the need for clear regulatory frameworks to protect investors and creditors alike.
Disclaimer: Remember that nothing in this article and everything under the responsibility of Web30 News should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves inherent risks and potential investors should be aware that capital is at risk and returns are never guaranteed. It is imperative that you conduct thorough research and consult with a qualified financial advisor before making any investment decision.
