DCG files a motion to object to Genesis Capital’s bankruptcy plan


  • DCG has filed a motion to object to the bankruptcy plan of Genesis Capital citing violations.
  • Settlement and negotiations show progress.

Digital Currency Group (DCG) has taken legal action against its subsidiary, Genesis Capital, over its bankruptcy plan, alleging violations of the Bankruptcy Code. In a motion filed on February 5th, DCG argued that Genesis’ proposed plan would overpay its customers, going beyond what is legally required. DCG stated that it would support a plan that fully reimburses creditors but claimed that Genesis had not proposed such a plan.

DCG shows displeasure at Genesis Capital’s plans

Genesis, along with its unsecured creditors and lenders, devised a plan that would pay unsecured creditors “hundreds of millions of dollars more than the full amount of their claims,” according to DCG. The objection from DCG centers on what it perceives as preferential treatment given to a select group of creditors at the expense of others.

DCG argued that such a plan disproportionately benefits a small controlling group of creditors and violates the Bankruptcy Code. Additionally, DCG claimed that the proposed plan strips it of valuable economic and corporate governance rights, further contravening bankruptcy regulations and demonstrating a lack of good faith. Consequently, DCG stated its opposition to the plan and urged the court not to approve it.

Genesis Capital, a crypto lender, has been grappling with the fallout from the cryptocurrency bear market of 2022. Following a liquidity crisis in November 2022, Genesis filed for bankruptcy in January 2023, owing over $3.5 billion to its top creditors, including Gemini. The firm sought to liquidate $1.6 billion of its assets but encountered obstacles in reaching settlements with DCG and Gemini, its former business partner.

In a significant development, Genesis and its affiliates reached a settlement with the United States Securities and Exchange Commission (SEC) for $21 million on January 31, 2024. The legal team representing Genesis proposed a hearing on February 14th to incorporate the SEC settlement into its bankruptcy proceedings. This settlement marked progress for Genesis amidst its ongoing legal challenges.

Settlement and negotiations show progress

Previously, in November 2023, Genesis announced an agreement with DCG to repay its outstanding $324.5 million in loans by April 2024. This proposed deal aimed to resolve a lawsuit initiated by Genesis against DCG in September, seeking repayment of overdue loans totaling around $620 million. The potential resolution of this dispute represented a significant step forward for Genesis in its efforts to navigate its financial difficulties.

Genesis’ bankruptcy saga underscores the challenges facing cryptocurrency lending firms in volatile market conditions. The fallout from the 2022 bear market has reverberated across the industry, leading to insolvency and legal battles for several companies. Genesis’ experience serves as a cautionary tale for firms operating in the crypto lending space, highlighting the importance of risk management and regulatory compliance.

As Genesis continues to navigate its bankruptcy proceedings, the outcome will have implications for creditors, stakeholders, and the broader cryptocurrency ecosystem. The resolution of legal disputes, such as the settlement with the SEC and the ongoing negotiations with DCG, will shape Genesis’ path forward and determine the extent of its financial obligations.

DCG’s objection to Genesis’ bankruptcy plan underscores the complexities and conflicts inherent in restructuring processes. As Genesis seeks to address its financial liabilities and settle legal disputes, the outcome will have far-reaching implications for all parties involved. The resolution of Genesis’ bankruptcy proceedings will provide insights into the regulatory landscape surrounding cryptocurrency lending and the challenges facing companies operating in this rapidly evolving sector.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

Share link:

Owotunse Adebayo

Adebayo loves to keep tab of exciting projects in the blockchain space. He is a seasoned writer who has written tons of articles about cryptocurrencies and blockchain.

Most read

Loading Most Read articles...

Stay on top of crypto news, get daily updates in your inbox

Related News

VanEck predicts Ethereum layer 2s to be worth $2t by decade's end
Subscribe to CryptoPolitan