Digital Currency Group (DCG) opposes Genesis bankruptcy plan due to asset valuation dispute
Posted: February 6, 2024 9:48 AM Updated: February 6, 2024 9:48 AM
Correction and fact check date: February 6, 2024, 9:48 AM
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DCG opposed Genesis’ bankruptcy plan, arguing it was an overpayment given the rising value of assets such as Bitcoin and Ethereum.
Digital Currency Group (DCG) has filed a formal objection to the bankruptcy plan proposed by its subsidiary Genesis Global Capital, citing controversial asset valuation. In a statement late Monday, DCG argued that Genesis’ plan to allocate additional payments to customers exceeds its legal rights.
The core of the dispute lies in the valuation of cryptocurrency assets, and DCG is insisting that the repayment amount be fixed according to the value of cryptocurrency assets as of January 2023, when Genesis filed for bankruptcy. However, according to Reuters, Genesis has been insisting on accounting adjustments to reflect the rise in asset prices such as Bitcoin and Ethereum since January 2023, and DCG claims that this position violates U.S. bankruptcy law.
Accordingly, Genesis Global Capital began liquidating its assets without being able to reach an amicable agreement with DCG, its former business partner Gemini, and regulators.
The U.S. Securities and Exchange Commission (SEC) took legal action against Genesis for allegedly illegally selling securities through Gemini Earn, a cryptocurrency lending program it co-manages before the company filed for bankruptcy.
Genesis bankruptcy plan receives support from Gemini
Support for Genesis’ bankruptcy plan has emerged from Gemini, a popular cryptocurrency exchange led by the Winklevoss twins. Gemini claims the proposed plan provides a viable route to repay customers who have endured asset lock-up for more than 16 months.
This conflict over asset valuation in bankruptcy proceedings reflects recent legal precedent established in FTX’s Chapter 11 case. U.S. Bankruptcy Judge John Dorsey has ruled in favor of using cryptocurrency prices to value customer claims from November 2022, despite objections from customers, confirming clear parameters outlined in U.S. Bankruptcy Code.
The unfolding story between DCG and Genesis Global Capital highlights the complex legal and financial complexities surrounding cryptocurrency-related bankruptcies. As regulatory scrutiny intensifies in an evolving environment, the outcome of this dispute will undoubtedly have far-reaching implications for stakeholders within the cryptocurrency ecosystem.
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Kumar is an experienced technology journalist specializing in the dynamic intersection of emerging fields including AI/ML, marketing technology, cryptocurrency, blockchain, and NFTs. With over three years of experience in the industry, Kumar has established a proven track record in crafting compelling narratives, conducting insightful interviews, and providing comprehensive insights. Kumar’s specialty is producing high-impact content including articles, reports and research publications for prominent industry platforms. With a unique skill at combining technical knowledge and storytelling, Kumar excels at communicating complex technical concepts in a clear and engaging way to diverse audiences.
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Kumar is an experienced technology journalist specializing in the dynamic intersection of emerging fields including AI/ML, marketing technology, cryptocurrency, blockchain, and NFTs. With over three years of experience in the industry, Kumar has established a proven track record in crafting compelling narratives, conducting insightful interviews, and providing comprehensive insights. Kumar’s specialty is producing high-impact content including articles, reports and research publications for prominent industry platforms. With a unique skill at combining technical knowledge and storytelling, Kumar excels at communicating complex technical concepts in a clear and engaging way to diverse audiences.