Genesis’ ongoing dispute with its parent company, DCG, potentially raises Concerns for Creditor Repayment Lawsuit.
Due to the bankruptcy of the cryptocurrency exchange Genesis, market sentiment had deteriorated. The insolvent cryptocurrency exchange will be nursing yet another sore tooth ahead of the court case.
Genesis has yet to determine the legal course of action regarding its repayment obligations to creditors. According to a Bloomberg report, Genesis could encounter difficulties in the court case due to an ongoing dispute with its parent company, DCG.
Dispute to Derail Court Case of The Crypto Exchange
As it seeks court approval to distribute billions of dollars in assets among creditors, bankruptcy cryptocurrency lender Genesis Global Capital faces an unexpected adversary, according to a report by Bloomberg.
The Genesis-suggested repayment method may provide Barry Silbert’s Digital Currency Group, the organization’s corporate employer, with cause for contention.
Additionally, Bloomberg notes that a courtroom dispute between Genesis and DCG is slated to occur in White Plains, New York, on Monday. The present matter pertains to the repayment strategy devised by the insolvent subsidiary to its creditors. Since November 2022, creditors’ cash and digital assets have been blocked on the platform.
Concerns Raised by DCG Regarding Genesis’ Repayment Method
DCG had previously expressed apprehensions regarding Genesis’ repayment practices. The firm claims that in the event the court approves its proposal, creditors who transferred digital assets to it could potentially recover up to 77% of their debt.
However, if DCG prevails, this amount may be reduced. DCG’s contention is predicated on apprehensions that the settlement may fail to comply with United States bankruptcy regulations.
Additionally, DCG indicated that the repayment method creates the appearance of an endeavor to circumvent the legal proceedings associated with bankruptcy.
How Did Genesis Fall?
Genesis, one of the significant cryptocurrency lenders, declared bankruptcy in the United States due to the worldwide cryptocurrency crisis. Genesis Global Capital unsuccessfully attempted to keep the company viable until it filed late for Chapter 11 bankruptcy protection in New York.
A court document estimates the aggregate assets and liabilities of the lenders to be in the range of $1 billion to $10 billion. Following the precipitous downfall of FTX in November 2022, the organization ceased permitting withdrawals from its clientele. Subsequently, it has engaged in discussions with its creditors and endeavored to procure supplementary funds.
The ongoing dispute with its parent company may exacerbate Genesis’s ongoing challenges in reaching a mutually agreeable resolution for creditor repayments.
