Genesis Global Completes Restructuring, Begins $4 Billion Creditor Repayment
Genesis Global and its affiliates announced the successful completion of their restructuring process on Friday, following their bankruptcy filing in January 2023. The company has now started distributing approximately $4 billion in digital assets and U.S. dollars to settle debts with creditors, as per a recent press release.
When Genesis sought bankruptcy protection last year, it revealed it had more than 100,000 creditors and liabilities up to $10 billion. The top 50 creditors, which included major entities such as crypto exchange Gemini, asset manager VanEck, and trading firm Cumberland, were collectively owed about $3 billion.
On Friday, wallets linked to Genesis initiated the transfer of $1.5 billion worth of Bitcoin and Ether. The firm has reached out to creditors, providing instructions on how to claim these funds.
Creditors of Genesis can expect to recover, on average, 64% of their cryptocurrency holdings, though this will differ depending on the specific coin. Bitcoin creditors will receive 51.28% of their Bitcoin, Ethereum creditors 65.87% of their Ether, and Solana creditors 29.58% of their Solana. Those owed stablecoins or U.S. dollars will be fully compensated, receiving 100% of their missing funds, according to the company.
"Creditors will be entitled to additional recoveries following the initial distribution, depending on the results of ongoing claims reconciliation, contractual rights against third parties, and litigation," the firm stated. Earlier, in May, Gemini confirmed that its clients had received full payouts from Genesis, which had managed assets in Gemini's now-defunct "Earn" product.
Genesis was one of many companies affected by the market contagion following the 2022 crypto downturn. The collapse of Terra led to a series of defaults among over-leveraged and poorly managed businesses, culminating in the disastrous failure of the FTX crypto exchange.
Initially impacted by the downfall of the Three Arrows Capital hedge fund, Genesis received a $1.1 billion promissory note and a loan from its parent company, Digital Currency Group (DCG), to survive. However, additional losses from the collapse of Sam Bankman-Fried’s Alameda Research eventually forced Genesis to halt withdrawals and declare bankruptcy.
Currently, DCG and Genesis are embroiled in a civil lawsuit filed by New York Attorney General Letitia James, accusing the firms of defrauding investors by misrepresenting Genesis’ solvency and concealing financial issues.