Genesis seeks to repay customers in full in response to rising currency prices, DCG cries “violation of US bankruptcy laws”

According to Reuters, DCG opposes the compensation plan proposed by its bankrupt subsidiary, Genesis Global Capital. Genesis suggested providing “additional compensation” to its customers due to the increase in the prices of assets such as Bitcoin and Ethereum. However, DCG believes that this violates the US bankruptcy law and deprives DCG of its governance rights.

DCG states that Genesis’s proposal to provide “additional compensation” to customers violates the US bankruptcy law because the amount paid to customers and creditors by Genesis should not exceed the value of the encrypted assets at the time of Genesis’s bankruptcy application in January 2023.

DCG also believes that this action would deprive DCG of its governance rights.

Due to Genesis’s failure to reach a settlement with its former business partners, Gemini and DCG, regulatory authorities have filed lawsuits against these three companies for their business practices, and the assets are currently being liquidated.

Last week, Genesis submitted a motion to the court requesting approval to sell its holdings of Grayscale Trust assets, including nearly $1.4 billion worth of GBTC, as well as $200 million worth of ETHE and ETCG.

Genesis has reached a settlement agreement with the US Securities and Exchange Commission (SEC), and if there are remaining assets after fully compensating customers, Genesis has agreed to pay a civil fine of $21 million to the institution.

However, compared to the situation with bankrupt exchange FTX, Genesis seems to have more lenient standards for compensating customers. FTX insists on calculating the repayment amount based on cryptocurrency prices since November 2022. Although dozens of FTX customers have protested, US bankruptcy judge John Dorsey rejected these customer complaints during the hearing and approved FTX’s use of the 2022 prices, stating, “I have no discretion in this matter. US bankruptcy law is very clear that debts must be repaid based on the value at the time of the company’s bankruptcy application, and I have an obligation to comply with it.”

(FTX Update: Abandoning Platform Relaunch, Judge Approves Repayment of Customer Assets Based on “Bankruptcy Time Value”)

DCG

Genesis

US bankruptcy law