Digital Currency Group (DCG), the parent entity of bankrupt cryptocurrency lender Genesis Capital, is contesting Genesis' bankruptcy plan, asserting that it violates the Bankruptcy Code.
On February 5, DCG lodged a motion opposing the bankruptcy plan, arguing that Genesis was suggesting to allocate more funds to customers than legally mandated.
The court filing from DCG stated, "DCG would support a plan to pay creditors 100 cents on the dollar, and the estate currently has sufficient assets to do so." However, it noted that the debtors had not proposed such a plan.
DCG contended that instead, the debtors collaborated with Genesis' unsecured creditors and lenders to formulate a plan that would pay the unsecured creditors "millions more" than their total claims as of the filing date. According to DCG, such a plan would unfairly favor a select group of creditors and contravene bankruptcy laws.
The company further stated that such a scheme would deprive DCG of its economic and corporate governance rights, constituting a breach of the Bankruptcy Code and indicating a lack of good faith.
Genesis Capital has been endeavoring to liquidate $1.6 billion in assets after failing to reach a settlement with DCG and its former partner Gemini. The lender faced challenges due to the significant cryptocurrency market downturn in 2022, leading to the suspension of withdrawals and ultimately filing for bankruptcy in January 2023.
As part of its bankruptcy case, Genesis and its affiliates announced a $21 million settlement with the SEC on January 31, 2024. Genesis' legal team has proposed a hearing on February 14 to incorporate the SEC settlement into its bankruptcy proceedings.
In November 2023, Genesis disclosed that DCG had agreed to repay the outstanding $324.5 million loan by April 2024. This proposed agreement aims to resolve a lawsuit initiated by Genesis against DCG in September, seeking repayment of overdue loans amounting to approximately $620 million.
