Digital Currency Group (DCG) has objected to its subsidiary Genesis Capital’s bankruptcy plan claiming the plan proposes excessive payments to creditors, potentially by hundreds of millions.
DCG’s contention focuses on the claim that Genesis’ bankruptcy proposal seeks to pay creditors more than their due share. DCG emphasizes its willingness to support a fair plan that reimburses creditors fully, provided it adheres to legal entitlements.
However, DCG argues that the current plan, developed in collaboration with certain unsecured creditors, unfairly benefits a select group at the expense of others, thereby violating the Bankruptcy Code.
Financial Strains and Legal Battles
The backdrop to this dispute includes Genesis’ struggle to liquidate $1.6 billion in assets after failing to settle disagreements with DCG and Gemini. The crypto lender’s financial woes, accentuated by the 2022 market downturn, led to a bankruptcy filing in January 2023 following a liquidity crunch.
Moreover, Genesis recently reached a $21 million settlement with the SEC, aiming for court approval as part of its bankruptcy proceedings. This legal maneuvering follows an earlier agreement where DCG committed to repaying outstanding loans to Genesis, marking an effort to resolve ongoing litigation over financial disputes.
As the saga unfolds, the outcome of this legal challenge could set a precedent for handling creditor claims in bankruptcy cases within the volatile cryptocurrency market.
Also Read: DCG Pays Off Genesis Loans, Clears $1B Debt
