Genesis to Return $3 Billion to Creditors Amid Bankruptcy Proceedings

Genesis has received court approval to distribute $3 billion in fiat and cryptocurrencies among its creditors, reports CoinDesk.

This amounts to approximately 77% of the firm’s total liabilities. The parent company, Digital Currency Group (DCG), is not included in the list of claimants for compensation.

Genesis Global Holdco and its subsidiaries filed for Chapter 11 bankruptcy in January 2023. The holding suffered significant losses due to the collapses of Three Arrows Capital and FTX. The debt to the 50 largest creditors exceeded $3.5 billion.

Initially, the bankruptcy claims market Xclaim estimated the potential recovery by the company at 35% of their value.

At the time of writing, for amounts over $10 million in Bitcoin and Ethereum, the rate is 97-110%, while in fiat and stablecoins it is 89-91%.

Regarding the parent company, Judge Sean Lane stated:

“The data clearly shows that the debtors’ assets do not have sufficient value to provide DCG with a recovery as a shareholder after paying unsecured creditors.”

Previously, the firm advocated for limiting client claims to the value of cryptocurrencies on the date of Genesis’s bankruptcy. The judge added that DCG still “loses billions” even if such an option is adopted.

In his decision, he noted that DCG assumed Genesis’s $1.1 billion debt resulting from the bankruptcy. However, the 10-year promissory note provided did not cover the losses, which drew law enforcement attention to the holding’s financial practices.

Back in February, the New York Attorney General’s Office tripled the alleged fraud amount to over $3 billion in the case against Gemini, Genesis, and DCG.