DCG Challenges Genesis’ Bankruptcy Plan, Alleges Overpayment to Creditors
Digital Currency Group (DCG), the parent company of bankrupt crypto lender Genesis Capital, is contesting the bankruptcy plan proposed by Genesis, arguing that it violates the Bankruptcy Code. In a motion filed on February 5th, DCG claimed that Genesis was proposing to pay its clients more than they are legally entitled to.
Details of DCG’s Objection
DCG stated, ‘The debtors, in cooperation with Genesis’ unsecured creditors and Genesis’ lenders, have devised a cramdown plan that pays unsecured creditors hundreds of millions of dollars more than the total amount of their claims on the petition date.’
DCG would support a plan that pays creditors in full, and the current assets of the company would allow for it, but such a plan has not been proposed.
Context of Genesis’ Bankruptcy
Genesis is working to liquidate its $1.6 billion in assets after failing to reach agreements with DCG and its former business partner, Gemini. Genesis filed for bankruptcy in January 2023 after suspending withdrawals following a liquidity crisis in mid-November 2022. The company owed over $3.5 billion to its top 50 creditors, including companies like Gemini.
On January 31, 2024, Genesis and its affiliates announced they had reached a settlement with the US Securities and Exchange Commission (SEC) for $21 million. Genesis’ legal team proposed a hearing on February 14th to recognize the SEC settlement as part of its bankruptcy case.
