Thomas Daniels
Genesis Global and its affiliated entities have commenced the distribution of $4 billion to creditors, marking the end of their extensive restructuring process. According to a statement on August 2, the crypto lender has initiated repayments to over 100,000 creditors following its January 2023 bankruptcy declaration.
Creditors are experiencing varying recovery rates depending on asset type. Genesis disclosed that creditors would recover an average of 64% of the pre-bankruptcy value. Specifically, Bitcoin creditors are recovering 51.28%, Ethereum creditors 65.87%, and Solana creditors 29.58%. Notably, stablecoin and U.S. dollar creditors are recovering 100% of their fiat-pegged tokens and cash. The repayments are a mix of in-kind (the exact crypto asset deposited) and cash, following reports that Genesis had moved $3 billion in cryptocurrencies.
The company emphasized, “Creditors will be entitled to additional recoveries following the initial distribution, depending on the results of ongoing claims reconciliation, contractual rights against third parties, and litigation.”
Genesis’ downfall in 2022 was precipitated by a contagion effect in the crypto industry, with the collapse of Terra impacting the entire digital asset market. This event crippled entities like hedge fund Three Arrows Capital and crypto exchange FTX, eventually leading Genesis to halt withdrawals and declare bankruptcy.
Although Genesis received financial support from its parent company, Digital Currency Group (DCG), the assistance proved insufficient amidst legal disputes with crypto exchange Gemini and additional turmoil. The New York Attorney General, Letitia James, also sued DCG and Genesis for misleading investors and falsifying financial statements, resulting in a $2 billion settlement. Genesis’ restructuring plan includes a $70 million litigation fund intended to pursue actions against third parties, including DCG, as court battles persist.
