As a seasoned crypto investor with several years of experience under my belt, I’m closely following the recent developments regarding Genesis Global Capital and Digital Currency Group (DCG). The court approval of Genesis’ $3 billion repayment plan is a significant step forward in resolving the ongoing issues within the crypto lending industry.
Genesis Global Capital, a crypto lender that filed for bankruptcy, has obtained court permission to initiate its $3 billion debt repayment scheme for its creditors. This announcement was made public alongside the disclosure that Digital Currency Group (DCG), Genesis’ parent company, will not receive any value from the bankruptcy payout process.
Related Reading: Genesis Faces $21 Million Penalty As SEC Charges Are Settled=
US Court Sides With Genesis, Denies DCG Claims On Repayment Plan
On Friday, Judge Sean Lane of the US Bankruptcy Court, Southern District of New York endorsed Genesis’s proposed debt settlement plan, enabling the company to repay its creditors following its bankruptcy filing in January 2023.
I served as an analyst examining the events that unfolded in the cryptocurrency market in November 2022. One significant development was the closure of Genesis Global Capital, a prominent crypto lending platform, following the abrupt downfall of FTX and its affiliate Alameda Research, which was a massive crypto exchange and trading firm respectively.
Based on a Wall Street Journal article, it is alleged that Genesis extended unsecured loans worth millions of dollars to Alameda Research before the firm collapsed. Furthermore, $2.4 billion was transferred from Genesis to Three Arrows Capital, a crypto hedge fund that faced liquidation in June 2022.
As a researcher examining the events surrounding Genesis’ repayment plan submission in November 2023, I discovered that Genesis proposed a plan aiming to ensure each customer received a minimum of 77% of their deposit value. However, this proposal faced significant resistance from DCG, Genesis’ parent company. DCG argued that the proposed payout exceeded what customers were rightfully entitled to, given the considerable appreciation of crypto assets in the preceding year.
On Friday, Judge Lane dismissed DCG’s appeal, stating that their involvement in the repayment fund was insignificant since they are classified as subordinated creditors, even though they hold equity stakes in the failed crypto lending firm.
The judge indicated that DCG is unlikely to derive significant financial benefits from funds or assets once Genesis has completed paying off its debts to its creditors, which include both state and federal regulatory bodies, who hold priority in the repayment order.
A statement from the ruling read;
As a researcher examining this case, I’ve come across an interesting point where the court overruled DCG’s objection based on their perceived lack of recovery as an equity holder under the Plan. However, upon further analysis, it becomes clear that there aren’t nearly enough assets available to provide any substantial recovery for DCG in these cases. In essence, DCG has failed to present any compelling evidence supporting their argument that the New York Attorney General Settlement Agreement is unreasonable or inappropriate.
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2024-05-19 13:11