Genesis moves for early bankruptcy payouts as NYAG suit applies pressure

Oct. 25, 2023

By Mike Dalton

A recent lawsuit initiated by the New York Attorney General’s Office (NYAG) could impact Genesis’ bankruptcy process, according to a Oct. 24 report from Reuters.

Genesis plans to propose a “no deal” bankruptcy plan in response to actions taken by the NYAG, in which, instead of waiting for the lawsuit’s outcome, it would distribute available crypto assets to customers and establish a process to maintain litigation claims against DCG and others, as stated by Genesis attorney Sean O’Neal in a New York court hearing.

The proposed “no deal” plan, if implemented, would likely result in diminished payouts for its users. However, this plan would shield these payouts from repercussions arising from the NYAG lawsuit.

The New York regulator sued Genesis Global, its parent company Digital Currency Group (DCG), and its one-time partner Gemini on Oct. 19, alleging that the three companies committed a $1 billion fraud against customers through a lending program. It aims to have the companies pay an unspecified amount of damages and penalties and halt certain operations in New York.

Separate from that lawsuit, Genesis’s bankruptcy proceedings have been ongoing since January. Early filings indicate the company owes $3.5 billion to its creditors, including $765 million to lending customers whose balances were previously locked.

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