Loading...

Digital Currency Group opposes Genesis’ NYAG settlement

Digital Currency Group opposes Genesis' NYAG settlement

Contents

Share link:

TL;DR

  • Digital Currency Group opposes a settlement between its subsidiary Genesis and the NYAG, filed on Feb. 21.
  • The objection criticizes the settlement for basing creditor payments on asset valuation at distribution rather than at the petition date, contrary to the Bankruptcy Code.
  • DCG argues the settlement unfairly benefits unsecured creditors at the expense of secured creditors and equity holders, like DCG itself.

The clash between Digital Currency Group (DCG) and the New York Attorney General’s Office (NYAG) over a settlement involving DCG’s bankrupt subsidiary, Genesis, has taken a new turn. On February 21, DCG lodged a formal objection against the agreement, challenging its compliance with the Bankruptcy Code and raising concerns over its treatment of creditors and equity holders.

DCG’s main point of complaint lies with the settlement’s approach to compensating unsecured creditors, which is based on the asset valuation at the time of distribution. This method deviates from the traditional bankruptcy practice, which typically determines payments based on the asset valuation at the petition date. The objection points out that such a deviation not only contradicts the United States Supreme Court’s rulings, which uphold that settlements must not violate the Bankruptcy Code, but also potentially disadvantages secured creditors and equity holders, including DCG itself.

According to DCG, the settlement effectively sidelines them by allocating all residual value left in Genesis’ estate to unsecured creditors once they are paid. This move, DCG argues, deprives them of the fair opportunity to participate in the distribution of the estate’s remaining assets, undermining their position as a creditor and an equity holder. As the sole equity holder in Genesis, DCG’s stance is that of a secured creditor, a position they believe should afford them certain protections and considerations under the settlement.

DCG further criticizes the settlement for being hastily assembled and shrouded in secrecy, without adequate consideration of the claims’ merits or an attempt to secure the best possible deal for the estate. This, they suggest, indicates a lack of due diligence on Genesis’ part in evaluating options for resolving the claims and maximizing the estate’s value for all parties involved.

The objection emerges against the backdrop of a lawsuit filed by the NYAG against Genesis, DCG, and the crypto exchange Gemini in October. The lawsuit accuses the parties of defrauding investors through the Gemini Earn program, a partnership between Genesis and Gemini. Genesis’ suspension of withdrawals in November 2022 and subsequent bankruptcy filing in January 2023 further complicates the situation, raising questions about the company’s financial management and its implications for creditors and investors.

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 decision.

Share link:

Jai Hamid

Jai Hamid is a passionate writer with a keen interest in blockchain technology, the global economy, and literature. She dedicates most of her time to exploring the transformative potential of crypto and the dynamics of worldwide economic trends.

Most read

Loading Most Read articles...

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

Related News

Safe Acquires Multis: Strategic initiation to Elevate Cryptocoin treasury management
Cryptopolitan
Subscribe to CryptoPolitan