Genesis Completes Bankruptcy Restructuring: $4 Billion Distributed to Creditors

Bankrupt crypto firm Genesis has successfully navigated its Chapter 11 restructuring plan, disbursing approximately $4 billion to creditors. The institutional lending platform, which filed for bankruptcy in 2023, announced on August 2 that it has completed its reorganization, marking a significant milestone in its recovery journey.

Genesis’ Comprehensive Payout Plan

As part of the restructuring plan, Genesis outlined specific recovery rates for various creditors. Bitcoin creditors are set to receive 51.28% of their claims in BTC, while Ether creditors will recover 65.87% in ETH.

Most altcoin creditors can expect 87.65% of their holdings back, with the exception of Solana (SOL) creditors, who will see a recovery rate of 29.58%. Stablecoin and cash creditors are eligible for a full recovery of their claims in US dollars.

Additionally, a $70 million litigation fund has been established to aid creditors seeking further legal action against third parties, including Genesis’ parent company, Digital Currency Group (DCG).

Source: Arkham Intelligence

The Aftermath of the 2022 Crypto Contagion

The ripple effects of the 2022 crypto market crash significantly impacted Genesis. The firm, which engaged in institutional lending, borrowed from entities like Gemini and lent to firms such as Three Arrows Capital. The collapse of Three Arrows Capital led to financial strife, creating a rift between Gemini co-founder Cameron Winklevoss and DCG CEO Barry Silbert. Winklevoss accused Silbert of fraud and poor management of the conglomerate that owns Genesis, Grayscale, Foundry, and Luno.

Genesis’ Settlement with the SEC

In addition to restructuring, Genesis has settled with the Securities and Exchange Commission (SEC) for $21 million over allegations of selling unregistered securities linked to the Gemini Earn program. SEC Chair Gary Gensler emphasized the need for all cryptocurrency lending platforms to adhere to existing securities laws, highlighting the regulatory pressures facing the crypto industry.

Also Read: Genesis Bankruptcy: A Warning for the Crypto Industry.