Key Takeaways
- BTC creditors will receive 51.28% recoveries, payable on an in-kind basis in the form of BTC while ETH creditors will get 65.87% recoveries paid out in ETH
- SOL holdings will be subject to a 29.58% recovery rate, payable on an in-kind basis.
- Stablecoin and cash creditors will be eligible to reclaim 100% of their losses in the form of US dollars.
Crypto lender Genesis Global completed its Chapter 11 bankruptcy restructuring plan and began distributing about $4 billion in digital assets and cash to creditors.
Under the plan, Bitcoin creditors will receive 51.28% recoveries as valued on an in-kind basis in the form of BTC while Ether creditors will receive 65.87% recoveries paid out in the digital currency.
Most altcoin creditors will receive 87.65% recoveries of their digital assets, while creditors reclaiming SOL holdings will be subject to a 29.58% recovery rate, payable on an in-kind basis. The restructuring plan also states that stablecoin and cash creditors will be eligible to reclaim 100% of their losses in the form of US dollars.
A $70 million litigation fund for creditors seeking further legal action against any third parties to the bankruptcy, such as Genesis’ parent company Digital Currency Group (DCG), has also been established.
According to blockchain intelligence firm, Arkham Intelligence, Genesis Trading has transferred around 32,256 BTC and 256,775 ETH worth $2.1 billion and $838 million to several addresses in the past three days to begin repayment of creditors.
The company filed for bankruptcy in January 2023 after mismanaging investors’ funds through the Gemini Earn program. In its bankruptcy filing, the firm disclosed it had upwards of 100,000 creditors and around $10 billion in liabilities.
Gemini’s Earn program, launched in February 2021, allowed customers to lend their cryptocurrency to Genesis and receive interest payments in return. However, Genesis defaulted on loans totalling approximately $1 billion from Earn customers in November 2022, prompting its subsequent bankruptcy filing in January 2023.
The bankruptcy filing came after Genesis suspended withdrawals from its platform in November 2022 amidst the collapse of FTX.
In June 2024, New York Attorney General Letitia James recovered $50 million from the cryptocurrency platform Gemini Trust to repay investors defrauded in its Gemini Earn program. This payout was on top of James’ related $2 billion settlement with Genesis Global Capital, which she announced on May 20.
In March 2024, Genesis also agreed to pay a $21 million civil fine to settle charges that it illegally sold securities through its crypto lending program without registering them. The settlement put an end to the January 2023 charges the SEC filed against Genesis and Gemini Trust Company LLC over their joint crypto lending program.
