Genesis Global Completes Restructuring and Begins $4 Billion Distribution to Creditors

by Pooja Chauhan · 02/08/2024

Genesis Global concludes restructuring and starts distributing $4 billion in digital assets and U.S. dollars to repay creditors following its January 2023 bankruptcy. Learn more about the recovery plan and payouts.

Bollywood Fever: Genesis Global and its related entities announced the completion of their restructuring process on Friday, following a bankruptcy filing in January 2023. The firm has started distributing approximately $4 billion worth of digital assets and U.S. dollars to repay creditors, as stated in a press release.

When it filed for bankruptcy last year, Genesis revealed it had over 100,000 creditors and liabilities amounting to as much as $10 billion. The company owed approximately $3 billion to its top 50 creditors, which included crypto exchange Gemini, asset manager VanEck, and trading firm Cumberland.

Genesis Global Completes Restructuring and Begins $4 Billion Distribution to Creditors

Wallets connected to Genesis began transferring $1.5 billion worth of Bitcoin and Ether on Friday, according to The Block. The firm has reached out to creditors with instructions on how to receive these funds.

On average, Genesis creditors will recover 64% of their in-kind cryptocurrency repayments, though the amount will vary by coin. Bitcoin creditors will receive 51.28% of their Bitcoin back, Ethereum creditors 65.87%, and Solana creditors 29.58%. Those owed stablecoins or U.S. dollars will receive 100% of their missing funds, the company stated.

“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 wrote. In May, Gemini announced its clients had received full payouts from Genesis, which had managed the assets in Gemini’s “Earn” product that shut down following Genesis’ insolvency.

Genesis was one of many firms affected by the market contagion following the downturn of 2022. Over-leveraged or poorly managed businesses began to default after the collapse of Terra, ultimately leading to the catastrophic failure of the FTX crypto exchange.

Genesis, initially impacted by the collapse of the Three Arrows Capital hedge fund, received a loan and a $1.1 billion promissory note from its parent company, Digital Currency Group (DCG), to stay afloat. However, further losses after the collapse of convicted fraudster Sam Bankman-Fried’s Alameda Research forced Genesis to close withdrawals and file for bankruptcy.

DCG and Genesis are currently involved in a civil lawsuit brought by New York Attorney General Letitia James, who argues the firms defrauded investors by misrepresenting Genesis’ solvency and covering up a deficit in its balance sheet.

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