Lenders of Genesis Criticize “Wholly Insufficient” Agreement with Digital Currency Group

4:13 pm
August 30, 2023
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The lenders of bankrupt cryptocurrency lender Genesis have expressed dissatisfaction with the recent in-principle settlement agreement reached with various parties, including the Digital Currency Group (DCG). The Ad Hoc Group of Genesis Global Capital (GGC) lenders, represented by lawyers Brian Rosen and Jordan Sazant, responded to a public bankruptcy plan update by stating that the agreed-upon settlement was “wholly insufficient” to satisfy the loan amounts.

The public update, posted on August 29, announced that DCG had reached an agreement in principle with Genesis’ unsecured creditors and debtors, proposing recoveries of 70%–90% of the USD equivalent. However, the Ad Hoc Group, as well as the Gemini exchange, did not support the proposed agreement. The lenders argued that the debtors and unsecured creditors were not fulfilling their fiduciary obligations to maximize creditor recoveries and instead trying to move on from the situation.

In their response, the Ad Hoc Group highlighted that they did not consider DCG’s contribution to be sufficient and criticized the inclusion of non-consensual third-party releases. They argued that DCG should not be released from liability to other non-debtor parties without the consent of all potential claimants.

Genesis, like other cryptocurrency lending firms, was heavily impacted by the cryptocurrency market downturn in 2022. The company filed for bankruptcy in January 2023 after suspending withdrawals due to a significant liquidity crisis in November 2022. With a debt of over $3.5 billion to its top 50 creditors, including Gemini, the lender faced severe financial difficulties.

Summary

The lenders of Genesis Global Capital, a bankrupt cryptocurrency lender, have criticized the in-principle settlement agreement reached with Digital Currency Group and other parties. They argue that the agreement is “wholly insufficient” to satisfy the loan amounts, and they are not supportive of the proposed terms. Lenders also raised concerns about third-party releases and the failure to maximize creditor recoveries. Genesis filed for bankruptcy after facing significant financial challenges amid the cryptocurrency market downturn.

FAQs

What is Genesis Global Capital?

Genesis Global Capital is a cryptocurrency lender that filed for bankruptcy in January 2023 due to financial difficulties caused by the cryptocurrency market downturn.

What is Digital Currency Group?

Digital Currency Group (DCG) is a global venture capital firm that invests in cryptocurrencies and blockchain-related companies.

Why are the lenders dissatisfied with the settlement agreement?

The lenders believe that the agreement reached with DCG and other parties is not sufficient to satisfy the loan amounts owed. They argue that the debtors and unsecured creditors are not fulfilling their fiduciary obligations to maximize creditor recoveries.

What is the Ad Hoc Group’s concern about third-party releases?

The Ad Hoc Group is opposed to the inclusion of non-consensual third-party releases, which would release non-debtor parties from liability to other non-debtor parties without the consent of all potential claimants.

What led to Genesis Global Capital’s bankruptcy filing?

Genesis Global Capital faced a liquidity crisis in November 2022 amid the cryptocurrency market downturn. The company was unable to meet its financial obligations, leading to the decision to file for bankruptcy in January 2023.


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