In a significant development for the cryptocurrency industry, Genesis Global, a bankrupt crypto lender, has received court approval for its liquidation plan. The company will return approximately $3 billion in cash and cryptocurrency to its creditors and investors. According to New York regulators, this includes thousands of customers allegedly misled by Genesis.
The settlement, approved by U.S. Bankruptcy Judge Sean H. Lane, marks a significant victory for creditors and a blow to Genesis’s owner, Digital Currency Group (DCG). The plan allocates up to $2 billion to settle a lawsuit filed by the New York Attorney General’s office, which accused Genesis of misleading investors about the risks associated with its Gemini Earn program.
This program, a collaboration between Genesis and crypto exchange Gemini, allowed users to earn interest on their deposited crypto holdings. However, when the crypto market experienced a downturn in late 2022, Genesis halted withdrawals, leaving many customers scrambling for their funds.
The bankruptcy court ultimately rejected DCG’s objections to the plan.
DCG had argued that Genesis should only be required to repay creditors based on the value of crypto assets at the time of the bankruptcy filing in January 2023. This approach would have significantly reduced the amount returned to creditors.
Judge Lane’s decision paves the way for a more substantial recovery for creditors, with estimates suggesting some may receive up to 77% of their original investment. This news offers hope for those impacted by Genesis’s collapse and serves as a reminder of the ongoing regulatory scrutiny surrounding the crypto industry.
