According to a report by Reuters, DCG has opposed the proposed payment plan by its bankrupt subsidiary Genesis Global Capital. Genesis proposed to offer “additional payments” to its customers due to the increase in asset prices such as Bitcoin and Ether. However, DCG believes that this violates the US bankruptcy law and deprives DCG of its governance rights.
DCG states that Genesis’s proposal to offer “additional payments” to its customers violates the US bankruptcy law due to the increase in asset prices such as Bitcoin and Ether. DCG believes that:
The amount paid by Genesis to its customers and creditors should not exceed the value of the encrypted assets at the time of Genesis’s bankruptcy filing in January 2023.
DCG also believes that this plan would deprive DCG of its governance rights.
Due to Genesis’s failure to reach a settlement with its former business partners Gemini and DCG, regulatory agencies have filed lawsuits against these three companies for their business conduct, and their assets are currently being liquidated.
Last week, Genesis also filed a motion with the court, requesting the judge to approve the sale of its owned Grayscale Trust assets, including nearly $1.4 billion worth of GBTC, as well as $200 million worth of ETHE and ETCG.
Genesis has reached a settlement agreement with the US Securities and Exchange Commission (SEC), and if there are remaining assets after fully repaying its customers, Genesis has agreed to pay a civil penalty of $21 million to the agency.
However, compared to the situation of the bankrupt exchange FTX, Genesis seems to have a more lenient standard for customer payments. FTX insists on calculating the repayment amount based on cryptocurrency prices since November 2022. Although dozens of FTX customers protested, US bankruptcy judge John Dorsey rejected these customer complaints at the hearing, approving FTX’s use of the 2022 prices, and stating:
“I have no discretion in this matter. The US bankruptcy law is very clear that debts must be repaid based on the value at the time of the company’s bankruptcy filing, and I have an obligation to adhere to it.”
(FTX update: Abandoning plans to relaunch the platform, judge approves repayment of customer assets using “bankruptcy prices”)
DCG
Genesis
US bankruptcy law