- Genesis Global, a subsidiary of Barry Silbert’s Digital Currency Group, has begun to repay its creditors following its bankruptcy restructuring.
- This marks a significant development in the aftermath of the crypto winter that led to Genesis’ financial collapse.
- The firm has started the distribution of nearly $4 billion in both digital assets and cash as outlined in the Chapter 11 bankruptcy plan.
Genesis Global begins creditor repayments as part of its post-bankruptcy plan, returning up to $4 billion in assets.
Initial Payouts and Asset Recovery Rates
According to the recent announcement, Genesis Global will return assets to its creditors through an in-kind and coin-by-coin basis. On average, creditors are expected to recover 64% of their holdings. Notably, Bitcoin (BTC) holders will recover 51.28% of their assets, while Ethereum (ETH) creditors will receive 65.87% back. Altcoin creditors, barring Solana (SOL) holders, will see an 87.65% recovery rate. However, SOL creditors will recover only about 30% of their holdings. Meanwhile, creditors owed in US dollars or stablecoins can anticipate a full 100% repayment in USD.
Litigation Fund and Potential Additional Recoveries
A critical component of the bankruptcy plan is the establishment of a $70 million litigation fund. This fund is intended to pursue claims against third-party entities, including Genesis’ parent company, Digital Currency Group. The fund is divided into $26 million in BTC, $13 million in ETH, and $31 million in USD. Further recoveries for creditors could be possible depending on the outcomes of ongoing claims reconciliation, contractual rights, and ongoing litigation against other parties.
Stakeholder Reactions and Court Rulings
Earlier this year, DCG contested the restructuring proposal, arguing it favored certain creditors over equity holders, effectively leaving nothing for the latter. However, the court sided with Genesis, stating the company lacked sufficient assets to satisfy DCG’s demands while still fulfilling its obligations to other creditors. Genesis halted customer withdrawals in November 2022 due to liquidity issues exacerbated by the collapse of the crypto hedge fund Three Arrows Capital.
Conclusion
The commencement of creditor repayments is a pivotal step for Genesis Global, marking a substantial move toward fulfilling its Chapter 11 obligations. While the established litigation fund promises potential additional recoveries, the initial distribution highlights the firm’s commitment to addressing its financial responsibilities. This development is a notable moment in the broader narrative of cryptocurrency market recoveries post-crypto winter, setting a precedent for structured repayments and thorough financial accountability in the industry.
