Genesis, cryptocurrency lender, to refund $3 billion to clients during bankruptcy wind-down

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Genesis, cryptocurrency lender, to refund $3 billion to clients during bankruptcy wind-down
Genesis, cryptocurrency lender, to refund $3 billion to clients during bankruptcy wind-down

A judge on Friday allowed cryptocurrency lender Genesis Global to return over $3 billion in cash and bitcoin to its clients in a bankruptcy liquidation.

In a bankruptcy liquidation, cryptocurrency lender Genesis Global was approved by a judge on Friday to restore almost $3 billion in cash and bitcoin to its clients; as a result, its owner, Digital Currency Group, will not be able to recover from the bankruptcy.

U.S. Judge Sean Lane of bankruptcy affirmed Genesis’ Chapter 11 liquidation plan and dismissed DCG’s objection, which stated that Genesis should only pay its creditors and consumers the amount the cryptocurrency assets were worth in January 2023, the month 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 the increase in value. For instance, in January 2023, the value of Bitcoin was $21,084, as opposed to its current $67,000 price.

DCG’s argument was dismissed by Lane, who concluded that Genesis would still have to pay a number of other creditors before it could provide funds to its equity owner, DCG. These creditors included federal and state financial authorities that 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.

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

Attorney Sean O’Neal for Genesis stated on Friday that the business did not agree with DCG’s claim that clients may receive payments “in full” in January 2023 due to reduced bitcoin pricing.

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

Genesis projected in February that, subject to future pricing changes, it could be able to reimburse its clients for up to 77% of the total amount of their claims.

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