Genesis Global Faces Turmoil with Parent DCG Over Repayment to Creditors

The collapse of the crypto exchange Genesis had set a bad sentiment in the markets. Currently, the bankrupt crypto exchange will have another sore tooth with the upcoming court case. The legalities are yet to decide the course of repayment to creditors that Genesis needs to follow. A Bloomberg report suggests that Genesis might face troubles with the court case due to existing disagreement with its parent parent company DCG.

Genesis-DCG Disagreement Likely to Dent Crypto Exchange’s Court Case

Bloomberg in its report highlights that as it requests court clearance for the division of billions of dollars in assets among creditors, bankrupt cryptocurrency lender Genesis Global Capital is up against an unexpected foe. Its corporate parent, Barry Silbert’s Digital Currency Group could have a bone of contention over the repayment method suggested by Genesis.

Bloomberg further highlights that Genesis and DCG are scheduled to square off in court on Monday in White Plains, New York. The current case revolves around the insolvent subsidiary’s repayment plan for creditors. Creditors at present have their cash and digital assets blocked on the platform since November 2022.

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DCG Highlights Issues with Genesis’ Repayment Method

Previously, DCG had raised concerns over Genesis’ repayment methods. According to the firm, creditors who gave it digital assets may be able to recoup as much as 77% of their debt if the court approves of its proposal, but less if DCG prevails.  The argument raised by DCG reflects concerns that the settlement might not adhere to US bankruptcy rules. DCG also signaled that the repayment method is giving the impression of attempting to evade the bankruptcy-related legal process.

The Genesis Fall: How Did it Happen?

One of the largest cryptocurrency lenders, Genesis, became the victim of the global crypto crisis by declaring bankruptcy in the United States. Genesis Global Capital filed for Chapter 11 bankruptcy protection in New York late after struggling to keep the business afloat. According to a court document, the lenders’ combined assets and liabilities are estimated to be between $1 billion and $10 billion. After the shocking collapse of FTX in November 2022, the company stopped allowing customer withdrawals. Since then, it has been negotiating with creditors and seeking to raise additional cash.

The disagreement that Genesis has currently with its parent company could only worsen its problems as the firm still struggles to find a middle ground for repaying its creditors.