Genesis to return $3bn in cash and cryptocurrency amid bankruptcy situation

Shruti Govil
Shruti Govil May 25, 2024
Updated 2024/05/24 at 8:03 AM

The bankruptcy liquidation of bitcoin lender Genesis Global was approved by a judge on Friday, returning around $3 billion in cash and cryptocurrency to its clients. This means that Digital Currency Group, the company’s owner, will not be able to recover from the bankruptcy.

Judge Sean Lane of the United States Court of Bankruptcy confirmed Genesis’ Chapter 11 liquidation plan and dismissed DCG’s objection, which said that Genesis should only pay its creditors and consumers the amount that the cryptocurrency assets were worth in January 2023, the month that Genesis filed for bankruptcy.

Since Genesis declared bankruptcy, the value of cryptocurrencies has increased significantly, and DCG and Genesis couldn’t agree on who should profit from this increase in value. For instance, in January 2023, the value of Bitcoin was $21,084, as opposed to its current price of $67,000.

DCG’s argument was dismissed by Lane, who decided that Genesis would still have to pay a lot of other creditors before it could provide funds to its equity owner DCG. These creditors included federal and state financial authorities who had filed $32 billion worth of claims, even if consumer claims were capped at the reduced pricing.

“There are nowhere near enough assets to provide any recovery to DCG in these cases,” Lane stated in his letter.

Genesis is making payments to its clients in bitcoin whenever it can, but it does not currently have enough of it to pay off its whole debt.

Sean O’Neal, an attorney for Genesis, stated on Friday that the business did not agree with DCG’s claim that clients may get payment “in full” in January 2023 due to reduced bitcoin prices.

“We don’t buy into the idea that claims are capped at the petition date value,”

said O’Neal.

Based on projected pricing changes in the future, Genesis projected in February that it may reimburse its clients for as much as 77% of the total amount of their claims.

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