A United States court recently approved the distribution of $3 billion in digital assets by cryptocurrency lending company Genesis Global, which went bankrupt in November 2022 following the crisis that affected several trading outlets, including the Futures Exchange (FTX).
The approval followed a court sitting presided over by Judge Sean Lane on Friday, May 17, where he authorized the implementation of Genesis's Chapter 11 repayment plan.
Notably, the court order follows a similar announcement made by the imploded FTX exchange earlier this month. However, contrary to the FTX repayment plan, which proposes creditor reimbursements via USD, Genesis's repayment plan will involve Bitcoin and other cryptocurrencies.
While the current ruling is consent to the return of these lost assets, the modalities, particularly refunding creditors based on crypto assets' current market standings, would leave Genesis's owner, Digital Currency Group (DCG), with little or no hope of recovery from the bankruptcy. Hence, the attempt to kick against the court order.
DCG's Objections Dismissed By Presiding Judge
DCG's legal team had raised concerns about the potentially devastating impact of upholding the Chapter 11 repayment plan, which the judge dismissed, citing the magnitude of the creditor's claims and asserting that DCG did not have any legal backing to contest the Chapter 11 plan.
Judge Lane further explained that as a significant equity holder in Genesis, under the Chapter 11 repayment plan, the repayment of other creditors should be prioritized.
Creditors Could Recover Up To 77% Of Lost Assets.
Based on Genesis's proposal, creditors who previously lent their digital assets to it could make up an estimated 77% of its funds, markedly more than they would receive if DCG were successful in its plot to influence the court's verdict.
The refund plan garnered significant backing from creditors, including participants of the Gemini Earn program, a lending initiative operated in collaboration with the Winklevoss brothers' Gemini Trust.
Meanwhile, Judge Lane also expressed plans to approve a settlement with Letitia James, a New York Attorney General who had earlier sued Genesis because of the Gemini Earn program. The settlement would see former Gemini Earn customers recover their assets before the state authorities step in to claim them.
