Genesis, a cryptocurrency lending company that declared bankruptcy last year, recently received court approval to repay creditors $3 billion in cash and cryptocurrency, accounting for approximately 77% of total customer claims. It is worth noting that Genesis’ parent company, Digital Currency Group (DCG), will not receive any asset allocation.
Affected by the collapse of Three Arrows Capital and FTX, Genesis has suspended withdrawals since November 2022, resulting in Gemini's interest income product "Earn" customers being unable to withdraw their funds, and thus being involved in a debt crisis.
Genesis' holding company, Genesis Global Holdco LLC, and two subsidiaries subsequently filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in January 2023, owing at least $3.5 billion to the top 50 creditors.
After Genesis filed for bankruptcy protection, the market was once doubtful about "whether customers would eventually receive compensation" and "whether the bankruptcy proceedings could be completed quickly." This led to some of Genesis' claims being sold at 35% of their face value on the bankruptcy claims market Xclaim. .
As of now, Genesis users’ claims for Bitcoin and Ethereum are expected to receive 97% to 110% compensation if the amount exceeds US$10 million; if the claim amount does not exceed US$1 million, they will receive 74% to 94% compensation. .
As for claims in legal currency and stablecoins, if the value is between US$1 million and US$10 million, the compensation ratio is 89% to 91%; if the value of the claim is less than US$1 million, 73% to 88% will be reimbursed.
DCG, Genesis' parent company, will not receive any compensation.
"The record clearly demonstrates that the debtor's property does not have sufficient value to provide recovery to DCG as a shareholder after unsecured creditors are paid," Judge Sean Lane wrote in the filing.
Given the size of creditor claims, even if a court used the method proposed by DCG to value the claims, DCG would still lose billions of dollars as a shareholder.
DCG has previously argued that customer claims should be capped at cryptocurrency prices in January 2023, which they believe would allow customers to be repaid in full and potentially generate returns for DCG.
In addition, debt disputes between the two parent companies have also gone to court. Genesis filed a lawsuit against DCG last year and required DCG to repay loans worth more than 600 million US dollars. The two parties subsequently reached a repayment agreement, and DCG has paid 227.3 million US dollars so far. Dollar.
〈Genesis will repay US$3 billion to creditors, accounting for about 77% of total customer claims〉 This article was first published on "Blocker".