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• Genesis, in a finalized bankruptcy plan, will return $3 billion worth of customer assets, representing 77% of customer claims.
• Bankruptcy claims initially traded at 35% of account balance value.
• Digital Currency Group (DCG) will not receive a payout from the proceedings.

Genesis to Return $3B in Customer Assets in Bankruptcy Liquidation Plan

In a significant development for Genesis customers, the cryptocurrency lending firm has finalized a bankruptcy liquidation plan to return $3 billion worth of customer assets. This plan, approved by the court, represents approximately 77% of the total value of customer claims.

Initial Market Skepticism

When Genesis initially filed for Chapter 11 bankruptcy protection in January 2023, doubts loomed over the likelihood of customers being fully compensated. Bankruptcy claim marketplace Xclaim listed Genesis claims at just 35% of their value at the time. However, recent trading data indicates higher prices for these claims, with bitcoin or ether claims trading between 97-110% for claims over $10 million.

Digital Currency Group Exclusion

Despite the significant payout to customers, Digital Currency Group (DCG), the parent company of Genesis, will not be among the entities receiving a payout. The court ruled that there was insufficient value in Genesis’s estates to provide DCG with a recovery as an equity holder, given the size of creditor claims.

Scrutiny Over Financial Practices

The exclusion of DCG from the payout has drawn attention to the financial practices of both DCG and Genesis. DCG assumed a significant portion of Genesis’s debt from the collapse of Three Arrows Capital, but this illiquid obligation did not cover the losses, leading to questions about DCG’s financial health. Additionally, Genesis sued DCG over missed payments on loans, highlighting tensions between the two entities.

Conclusion

The finalized bankruptcy liquidation plan represents a significant step forward for Genesis customers, who will soon see the return of a substantial portion of their assets. However, the exclusion of DCG from the proceedings underscores broader concerns about the financial practices and relationships within the cryptocurrency industry. As the industry continues to evolve, regulatory scrutiny and transparency will be crucial in ensuring the integrity and stability of cryptocurrency firms and markets.