Troubled digital currency company Genesis Capital saw its settlement disrupted by creditors in two months after the initial agreement, raising concerns about the timing of the process.
Genesis’ parent company, Digital Currency Group (DCG), took to Twitter on April 25 to issue a statement on Genesis filing a motion for mediation. The firm said that Genesis’ settlement could be troubled due to renewed demands from creditors.
DCG Statement on Genesis filing Motion for Mediation: pic.twitter.com/pRluUnL49C
— Digital Currency Group (@DCGco) April 25, 2023
In February, Genesis Capital submitted a comprehensive settlement to the bankruptcy court after reaching an “agreement in principle” with DCG and its creditors. Under the proposed restructuring plan, Genesis creditors eUnder the initial settlement plan, Genesis creditors were expected to receive 80% recovery of funds lost due to the bankruptcy.xpected 80% recovery of funds lost due to the firm’s collapsed operations.
A few months later, Genesis creditors eventually raised their demands, significantly disrupting the ongoing court process, according to DCG.
“While it is difficult to understand the rationale given the limited engagement from Genesis creditors since the February court filing, our understanding is that a subset of creditors have decided to walk away from the prior agreement,” DCG wrote.
DCG noted that it remains committed to reaching a fair settlement deal for all and will have to take into account any new demands against previous concessions. The firm stated:
“We do not know if the hundreds of thousands of individual creditors are aware of this development, but the latest maneuver will prolong the court process.”
As previously reported, Genesis filed for Chapter 11 bankruptcy in the Southern District of New York in January 2023. In the filing, the company estimated liabilities of $1 billion to $10 billion and assets in the same range.
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Genesis is one of several companies that were hit by a massive liquidity crisis in the cryptocurrency market, triggered by the collapse of the exchange FTX. Other troubled crypto firms include crypto lender Celsius, Winklevoss’ crypto exchange Gemini, cryptocurrency conglomerate Three Arrows Capital and others.
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Author: Helen Partz