Genesis Liquidation Overhaul Rattles U.S. Government, Affecting Markets!
- Genesis shifts from reorganization to full liquidation plan, amidst legal battle with NYAG.
- U.S. Trustee highlights complexities, calls for creditors to assess the substantial changes.
- Over $1.65 billion owed by DCG complicates bankruptcy proceedings, as Genesis dismisses prior DCG deal as unviable route.
Genesis liquidation has raised eyebrows and drawn the attention of the U.S. government.
In a recent filing, the government noted that Genesis liquidation has drastically altered its bankruptcy plan, shifting from a strategy of reorganization to one of full liquidation.
The sudden change in direction, which comes on the heels of legal action taken against Genesis and its parent company, Digital Currency Group (DCG), by the New York Attorney General (NYAG), has introduced further complexity and potential delays into the winding-down process.
U.S. Trustee William Harrington, a Department of Justice official responsible for bankruptcy cases, highlighted the significance of this shift. He explained that the initial plan involved the sale of debtors’ assets, discharge of debts, and reorganization for the benefit of claim holders. However, the revised liquidation plan now entails the liquidation of all three debtors.
U.S. Trustee’s Call for Evaluation
Harrington contended that creditors would require more time to evaluate and come to terms with the substantial modifications made on October 24, raising questions about whether they would approve the new plan through a vote.
The bankruptcy proceedings, which began in January, have been complicated by the issue of how to handle over $1.65 billion owed to Genesis liquidation by DCG. In light of the legal challenges and accusations brought by NYAG Letitia James against DCG, Genesis, and business partner Gemini, Genesis liquidation has deemed a DCG deal as “not a viable route.” The legal battles and shifting strategies underscore the intricate nature of navigating cryptocurrency-related cases within the broader regulatory landscape.