Genesis Global Approved to Return $3 Billion to Customers

Shut the fund: Genesis Global, the defunct crypto lending outfit, has secured court approval to return roughly $3 billion of money and cryptocurrencies to its customers.

Genesis Distribution Plan Approved

The ruling affirms a Chapter 11 repayment plan, hashed out by Judge Sean Lane, that contains a unique distribution structure for returning Bitcoin and other tokens to its creditors. In doing so, the decision allows for the return of assets to the customers that have been frozen since the company suspended the withdrawal of its customers in November 2022.

The decision also pushed aside an objection from Genesis' parent company, Digital Currency Group, which has argued that Genesis should pay customers and other creditors much less than it holds in crypto asset value at the time of its January 2023 bankruptcy filing. Mr. Lane agreed and said the value available for distribution would be taken up by those claims not fully paid, leaving DCG billions of dollars out of the money.

Cryptocurrency prices have soared since Genesis' bankruptcy filing, setting up a tussle between DCG and Genesis about who gets the benefit from these price increases. DCG contended that claims from creditors should be based on the price of the cryptocurrencies at the time of the bankruptcy filing, when Bitcoin was at about $24,000, compared to more than $66,700 as of Friday. And Lane agreed, noting that Genesis has to pay several other creditors, including financial regulators, that have $32 billion in claims, ahead of DCG.

Regulatory settlements secure asset returns for Gemini Earn customers

Genesis has said that under the Genesis distribution plan, creditors who had lent digital assets would recover up to 77%. The plan is supported by a large group of creditors, among them customers of the Gemini Earn program, operated by the Winklevoss brothers' Gemini Trust Co.

A second settlement of a complaint with New York Attorney General Letitia James also was signed off by Judge Lane, providing that assets in the Earn program be restored to the former Earn customers, rather than state authorities. A third settlement, of a totally unrelated complaint with the US Securities and Exchange Commission, had also been signed off, related to the Earn program, which now has been shut.