Genesis Completes Restructuring, Begins $4 Billion Distribution to Creditors
Genesis Global Holdco, LLC and its subsidiaries have announced the completion of their Chapter 11 restructuring process on August 2, 2024, marking a significant milestone in the crypto lending firm’s recovery from bankruptcy. The company, which filed for bankruptcy protection in January 2023, has commenced distributing approximately $4 billion in digital assets and U.S. dollars to its creditors.
The restructuring plan, which does not cap recoveries at petition date value, offers varying recovery rates for different types of assets. Bitcoin creditors will receive 51.28% of their holdings, while Ethereum creditors will recover 65.87%. Altcoin creditors, excluding Solana, will see an average recovery of 87.65%, with Solana creditors receiving 29.58%. Notably, U.S. dollar and stablecoin creditors will receive 100% of their funds.
Mark Renzi, a Managing Director at BRG, has been appointed as the plan administrator to oversee the wind-down process. The company has also established a new board and formed Wind-Down and Litigation Oversight Committees to manage the ongoing affairs.
In a unique development, creditors have established a $70 million litigation fund to pursue legal actions against third parties, including Digital Currency Group (DCG), Genesis’ parent company. This fund consists of $26 million in Bitcoin, $13 million in Ethereum, and $31 million in U.S. dollars.
The Genesis bankruptcy was part of a broader market contagion that affected numerous crypto firms following the 2022 market downturn. The company’s troubles were exacerbated by the collapse of Three Arrows Capital and later by losses related to Alameda Research’s failure.
Despite the progress made through the restructuring, Genesis and DCG are currently facing a civil lawsuit from New York Attorney General Letitia James. The lawsuit alleges that the firms defrauded investors by misrepresenting Genesis’ solvency.
As part of its regulatory obligations, Genesis recently agreed to a $21 million settlement with the U.S. Securities and Exchange Commission over allegations of selling unregistered securities in connection with the Gemini Earn program.
The completion of Genesis’ restructuring and the commencement of distributions mark a significant step in resolving one of the major fallouts from the 2022 crypto market crash. However, the ongoing litigation and regulatory scrutiny underscore the continued challenges facing the cryptocurrency industry as it seeks to rebuild trust and stability.
