Court Gives Green Light to Genesis Global’s $3B Payout
Crypto News– Bankrupt cryptocurrency lender Genesis Global has obtained court approval to refund approximately $3 billion in cash and cryptocurrency to its creditors. This decision means that its parent company, Digital Currency Group (DCG), will not recover any funds from the bankruptcy proceedings.
On Friday, May 17, Judge Sean Lane sanctioned Genesis’s Chapter 11 repayment plan. This ruling paves the way for Genesis to release and reimburse customer assets that have been frozen since November 2022 when the company ceased withdrawals following the collapse of several major cryptocurrency firms.
Despite objections from DCG, which argued that Genesis should only repay customers and creditors based on the value of crypto assets as of January 2023, when Genesis filed for bankruptcy, Judge Lane ruled against it. The price of Bitcoin (BTC) has risen significantly since then, soaring from around $24,000 at the time to over $66,700 on May 17.
Court Grants Genesis Global Approval for $3B Payout
As a shareholder in Genesis, DCG holds a subordinate position in the repayment hierarchy during Chapter 11 proceedings. Judge Lane clarified that any funds available for distribution by Genesis are primarily allocated to satisfy creditor claims, which hold precedence over DCG’s equity stake.
Given the substantial creditor claims, Lane determined that DCG’s equity interest holds little to no value, resulting in a significant shortfall in the multibillion-dollar range. Dismissing DCG’s objection, he emphasized that even with capped customer claims, Genesis must prioritize repaying numerous other creditors, including federal and state financial regulators with claims totaling $32 billion, before considering any distributions to DCG, its equity owner.
FAQs
What does it mean for Genesis Global to receive court approval for a $3 billion payout?
Genesis Global receiving court approval for a $3 billion payout signifies that the company’s plan during bankruptcy proceedings has been approved by the court, and creditors will be reimbursed this amount.
What is the status of DCG’s ownership in Genesis Global?
As a shareholder in Genesis, DCG holds a lower position in the repayment hierarchy during Chapter 11 proceedings. The court has indicated that due to creditor claims surpassing DCG’s equity, DCG’s value is essentially negligible.
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