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Highlights
- Genesis's repayment plan approved, 97% asset return by May 2024.
- Court dismisses DCG's legal challenge, prioritizes creditor payouts.
- Genesis adds security with Approved Addresses for crypto transfers.
Genesis Global has been given the green light by the bankruptcy court to start a payout plan that will give back almost 97% of its assets to its creditors.
The decision was made after the court found that the Amended Plan proposed by Genesis is suitable for confirmation, thus allowing the disbursement of billions in digital assets.
Genesis Creditors to Receive 97% Payout
On May 17, 2024, Judge Sean Lane of the Bankruptcy Court confirmed Genesis Chapter 11 repayment plan, which also includes cryptocurrencies like Bitcoin to be returned directly to the creditors.
This method is in contrast to the other bankruptcy cases for instance FTX’s that proposed repayments in USD. The court also endorsed Genesis’s settlement with New York Attorney General Letitia James, that was related to the previously controversial Earn program.
Earn Update: Yesterday, the Bankruptcy Court issued a decision (i) finding that Genesis’s Amended Plan should be confirmed and (ii) approving Genesis’s settlement with the New York Attorney General. While this is a welcome decision for Genesis creditors, it does not impact the…
— GeminiTrustCo (@GeminiTrustCo) May 18, 2024
The approval is the crucial step that Genesis needed to be able to release customer assets frozen since November 2022, when the firm stopped withdrawals in a market downturn. The Genesis creditors, including the users of the Gemini Earn program, solidly supported the plan suggesting that all stakeholders were relieved.
Legal Challenges and Settlements
During the bankruptcy process, Genesis’s parent company, DCG, had legal problems, with Judge Lane dismissing one of its challenges against the repayment plan. In his 135-page judgment, Judge Lane pointed out that DCG, as an equity holder, was the last in line for repayment and, therefore, “out of the money” significantly.
Besides this internal conflict, the court’s approvals also included a settlement with the New York Attorney General which solved a lawsuit about Genesis Earn program operations.
This settlement shifts the possible penalties from state coffers to those who are affected, a move that is considered as a victory for the former Earn users.
Enhancing Security Ahead of Payouts
In anticipation of the forthcoming asset distribution, Genesis has introduced new security measures such as the activation of Approved Addresses for customer accounts. This security feature is designed to ensure that the users who want to transfer their digital assets to external wallets must first be vetted and approved, a process which can take up to seven days.
This stage reflects Genesis’s protection of creditor assets in the last stages of its bankruptcy resolution. The company, moreover, has announced that, although these changes will be made, the trading, storing, and fiat withdrawals for those who do not choose to transfer their crypto externally will still continue as usual.
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