Court approves Genesis wind-down
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Speaking of DCG subsidiaries, a bankruptcy judge approved Genesis Global's wind-down plan late last week, paving the way for some creditors to get their funds back.
Why it matters: Some $3 billion in cash and crypto will be returned to the lender's creditors, including 232,000 customers of the Gemini Earn program.
By the numbers: Genesis' plan to distribute about 77% of the value of customer claims would seem paltry against FTX's proposed plan to recoup customers 100%, plus interest, but it's better for those holding crypto because they'll get a refund in-kind.
- Like most corporate bankruptcies, FTX's plan fixes creditor claims on the value of the assets when the exchange filed for bankruptcy.
- That's below the value of most cryptocurrencies today. Bitcoin, for one, has more than tripled in value since Genesis filed for bankruptcy in January 2023. (And it's on the rise.)
Zoom in: The plan treats cash-holding and crypto-holding creditors differently, with cash claims getting a higher recovery in percentage terms, but crypto holders benefitting from the value of asset appreciation.
Catch up quick: That bankruptcy plan has been approved in spite of Genesis parent company DCG's objection, which argued that claims be valued on the dollar amount.
- DCG said it was entitled to receive the benefit from the increase in crypto prices that occurred since Genesis' filing (called the "petition date"), which came to roughly $1 billion.
- The judge overseeing the bankruptcy, Sean Lane, concluded otherwise.
The court also approved Genesis' settlement with the New York attorney general, to which DCG also previously objected.
What we're watching: The NYAG's settlement with Genesis does not release claims against other named defendants including Gemini, DCG, Genesis' previous chief Michael Moro and Silbert.
- Also, DCG can appeal.
