Genesis Bankruptcy Plan Approved by U.S. Court, Overruling DCG Objection

Genesis, the bankrupt crypto lender, has emerged victorious in a U.S. court battle over its bankruptcy plan, despite objections from owner Digital Currency Group (DCG). The plan, approved by U.S. bankruptcy judge Sean Lane, will see approximately $3 billion in cash and assets returned to creditors.

DCG had argued that claims should be valued in U.S. dollars at the time of Genesis’ bankruptcy filing in January 2023, but Judge Lane dismissed this argument, stating that there was not enough value in the company’s estates to provide DCG with a recovery as an equity holder.

The approved plan will allocate assets to creditors based on claim denomination, with creditors owed cryptocurrency being treated differently than those owed U.S. dollars. Judge Lane also noted that creditors with claims in U.S. dollars are expected to receive 100% of their loan balance, while those with claims in cryptocurrency will bear the shortfall in funds.

In response to the ruling, Gemini, the exchange owned by the Winklevoss twins, announced that reimbursements to creditors will begin soon. Approximately 97% of owed funds will be repaid initially, with payments taking the form of in-kind reimbursements. This approach differs from that of FTX, which plans to reimburse customers based on the dollar value of their claims at the time of FTX’s bankruptcy filing.

While DCG may have the option to appeal the ruling, it remains unclear what legal grounds they would have to do so given the significant shortfall in assets. The approval of Genesis’ bankruptcy plan marks a significant step forward for the company and its creditors, providing some much-needed clarity and resolution in the aftermath of its collapse.