BTCUSDT: Genesis to Return $3B Customer Assets in Bankruptcy Plan
The Genesis Filing for Bankruptcy after the Three arrow and FTX fraud allegations of Crypto investors funds nearly $3 Billion. Now Court has given approval for Genesis company to distribute 77% of investors claims settlement and mode is Cash and Digital form. January 2023 Genisis Filed bankruptcy for under $1 Million due to BTC is trading under $20K, Now its value is $60K above and money is reached to$10 Million value. Anyhow parent company of Genesis, DCG will not recover from losses of $1 Billion even if pay its creditors funds.
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Genesis recently received court approval to distribute $3 billion in cash and cryptocurrency to its creditors, as revealed in a recent filing. This distribution represents approximately 77% of the total value of customer claims. Notably, Digital Currency Group (DCG) will not be among the entities included in the payout list.
Genesis Global Holdco LLC, along with its subsidiaries, filed for Chapter 11 bankruptcy protection in New York in January 2023 due to substantial losses resulting from the collapses of Three Arrows Capital and FTX. The filing revealed debts of over $3.5 billion owed to the top 50 creditors.
Initially, there was skepticism in the market regarding whether customers would be fully compensated and if the bankruptcy proceedings would be efficiently concluded. In January 2023, bankruptcy claim marketplace Xclaim listed Genesis claims at 35% of their value.
As of the present, Genesis claims for bitcoin or ether are trading between 97-110% for claims over $10 million, while claims under $1 million are trading for between 74-94%. Claims for fiat currency or stablecoins in Genesis accounts are trading between 89-91% for accounts worth between $1-10 million, and between 73-88% for claims under $1 million.
DCG, the parent company of Genesis, will not receive any payout in the bankruptcy proceedings. This decision was based on the judgment that there is insufficient value in the Debtors’ estates to provide DCG with a recovery as an equity holder after unsecured creditors are paid. Judge Sean Lane, in the filing, highlighted that even if creditor claims were valued using DCG’s proposed method, DCG would still be out of the money by billions of dollars.
DCG had advocated for customer claims to be capped at the value of cryptocurrencies as of January 2023, believing this would allow for full repayment to customers and potentially a recovery for DCG. However, Judge Lane noted in the filing that DCG’s assumption of $1.1 billion of Genesis’s debt from the Three Arrows Capital collapse did not cover the losses, leading to scrutiny of DCG’s financial practices.
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DCG and Genesis had credit lines between them, leading to Genesis suing DCG over claims of missed payments on loans.
In November 2023, DCG and Genesis announced that they had reached a repayment plan. DCG has paid $227.3 million so far and plans to pay another $275 million by April to settle a lawsuit over $620 million in loans.
BTCUSDT: Genesis to Return $3B to Customers in Bankruptcy Wind-Down
Following the alleged fraud incidents involving Three Arrows and FTX, Genesis found itself embroiled in a bankruptcy filing, with cryptocurrency investors’ funds amounting to nearly $3 billion at stake. Now, after a series of legal proceedings, the court has granted approval for Genesis to distribute approximately 77% of the settlement claims to investors, with payments to be made in both cash and digital forms.
The genesis of Genesis’ financial woes traces back to January 2023 when it filed for bankruptcy protection, citing liabilities under $1 million. This filing coincided with a period when Bitcoin (BTC) was trading at under $20,000. However, since then, the value of BTC has surged, now hovering above $60,000. Consequently, claims that were initially valued at under $1 million have escalated to exceed $10 million.
Despite the favorable market conditions for cryptocurrency, Genesis’ parent company, DCG, faces a grim reality. Even if Genesis were to fully repay its creditors, DCG would still incur losses amounting to $1 billion. This predicament underscores the deep financial challenges confronting DCG, illustrating the profound impact of Genesis’ bankruptcy on its stakeholders and affiliates.
On Friday, Crypto lender Genesis Global obtained court approval to return approximately $3 billion in cash and cryptocurrency to its customers as part of its bankruptcy liquidation process. This decision leaves Genesis’ owner, Digital Currency Group (DCG), without any recovery from the bankruptcy proceedings.
U.S. Bankruptcy Judge Sean Lane approved Genesis’ Chapter 11 liquidation plan, dismissing an objection raised by DCG. DCG argued that Genesis should only pay its customers and creditors based on the value of the crypto assets as of January 2023, when Genesis filed for bankruptcy. However, cryptocurrency prices have surged significantly since then. For instance, Bitcoin, which was valued at $21,084 in January 2023, has now risen to around $67,000.
Lane rejected DCG’s objection, ruling that even if customer claims were capped at the lower prices, Genesis would still have to prioritize payments to numerous other creditors, including federal and state financial regulators with asserted claims totaling $32 billion, before addressing DCG’s equity ownership.
“There are nowhere near enough assets to provide any recovery to DCG in these cases,” Lane wrote.
While Genesis is endeavoring to repay customers in cryptocurrency where feasible, it lacks adequate cryptocurrency reserves to fulfill all its obligations.
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Genesis attorney Sean O’Neal disagreed with DCG’s assertion that customers could be paid “in full” based on the lower cryptocurrency prices in January 2023, stating, “We don’t buy into the idea that claims are capped at the petition date value.”
In February, Genesis estimated that it could repay its customers up to 77% of the value of their claims, depending on future price fluctuations.
DCG did not immediately respond to requests for comment on Friday.
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