Genesis creditors won’t get full value of their claims, bankrupt crypto lender files updated plan

• Bankrupt financial services firm Genesis has filed an update to its plan, first proposed on January 20. 
• The crypto lender disputes claims by parent company Digital Currency Group and hedge fund Three Arrows Capital. 
• While negotiations are ongoing, the update makes it clear that creditors won’t see the full value of their claims. 

Genesis, an investment firm focused on digital assets, filed an update to the plan it proposed on January 20, when filing for bankruptcy. Digital Currency Group (DCG) is the parent of the three Genesis companies that filed for bankruptcy.

The updated plan reflects that negotiations are ongoing and reveals that creditors are unlikely to see the full value of their claims. 

Also read: US SEC accused of reaching beyond its legal powers, likely violation of First Amendment rights of DeFi coders

Bankrupt crypto lender unlikely to pay back creditors in full

Genesis companies first filed for bankruptcy on January 20, 2023. The three companies owned by DCG have updated their plan to wind-up the digital assets focused investment firm and agree on several key issues that were disputed earlier.

Moreover, Genesis, its creditors and stakeholders state their positions and negotiations are still ongoing. In the last update on the bankruptcy filing, the court had appointed a mediator to help resolve differences between the entities and aid the process of coming up with a recovery plan for creditors.

The update filed earlier today indicates Genesis disputes claims made by DCG and Three Arrows Capital’s (3AC). It explains that creditors are unlikely to receive the full value of their claims, as the three Gemini companies reach an agreement. 

The filing reveals that DCG, 3AC, Alameda and FTX claims are labeled as impaired and all three group companies are “deemed to reject” the same. Holders of the DCG, 3AC and Alameda/ FTX claims are not entitled to reject or accept the updated plan of the bankrupt crypto lender, as seen on page 31 of the update document. 

According to a Reuters report from January, Genesis owes its creditors upwards of $3 billion. The bankrupt crypto lender has more than 100,000 creditors and its most notable ones include Gemini Trust Company (owed $766 million), crypto fund Mirana (owed $151.5 million), MoonAlpha Finance (owed $150 million), VanEck’s New Finance Income Fund (owed $53 million), and trading firm Cumberland ( owed $18.7 million).

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