Genesis Global Capital Battles DCG in Court Over Creditor Repayment Plan!

Key Points:

• Genesis Global Capital seeks court approval for asset distribution to creditors.
• Parent company DCG opposes the plan in an unexpected legal clash.
• Genesis estimates 77% creditor recovery, but DCG’s influence could reduce it.

Bankrupt crypto lender Genesis Global Capital is awaiting court approval for its proposal to distribute billions in assets to creditors.

The unexpected twist comes as its parent company, Barry Silbert’s Digital Currency Group (DCG), opposes the plan. Set to unfold in a White Plains, N.Y., court on Monday, the face-off arises from Genesis Global Capital’ initiative to repay creditors, reeling from the fallout of several large crypto companies‘ collapse in November 2022. Digital assets and cash belonging to creditors remain frozen on the platform.

Genesis vs. DCG in Courtroom Clash

The trial, scheduled for at least a few days, will be presided over by Judge Sean Lane, tasked with determining the legality of Genesis’ proposal under bankruptcy law. The amount Genesis creditors stand to recover is of paramount importance.

Managed independently under Chapter 11, Genesis Global Capital projects a potential 77% recovery for creditors providing digital assets if the court approves its plan. However, this amount could diminish if DCG prevails. Among the affected creditors are high-net-worth clients who lent cryptocurrency to Genesis and Gemini Earn clients.

Genesis’ Bid for Creditor Repayment Under Scrutiny

The bankruptcy saga has taken unexpected turns. Following Genesis’ filing for bankruptcy protection in January 2023, a restructuring agreement with DCG, Gemini, and major creditors aimed to conclude bankruptcy swiftly. Unfortunately, the deal fell apart, leading to subsequent proposals facing challenges.

Genesis scrapped a potential restructuring plan after regulators sued the company, its parent, and Gemini, alleging fraud against Earn customers and the issuance of unregistered securities. Legal hostilities escalated as Genesis sued DCG for loan recovery, and DCG countered, accusing Genesis of fraud in its lawsuit. The unfolding courtroom drama will shape the fate of Genesis and the fortunes of its creditors.