- A bankruptcy judge ruled on Friday that Genesis’ customers should benefit from the surge in crypto prices.
- Crypto prices have jumped from $21,084 to $67,000 since Genesis filed for bankruptcy.
US court granted Genesis Global approval to return approximately $3 billion in cash and cryptocurrency to its customers as part of bankruptcy liquidation. The decision, which leaves the bankrupt crypto lender’s parent company, Digital Currency Group (DCG), with no recovery, also directed that customers should benefit from the recent surge in crypto prices.
According to Reuters, US Bankruptcy Judge Sean Lane approved Genesis’ Chapter 11 liquidation plan on Friday, dismissing an objection by DCG that customer and creditor repayments should be based on the cryptocurrency values from January 2023, when Genesis filed for bankruptcy. During this period, Bitcoin was valued at $21,084, significantly lower than its current price of $67,000.
See Related: Celcius Repays $120M In Debt To Safeguard Against Its Liquidation
Rise In Crypto Prices Sparks Dispute
The increase in cryptocurrency prices since the bankruptcy filing led to a dispute between DCG and Genesis over who should benefit from the price appreciation. DCG contended that repayments should be capped at the earlier, lower prices, potentially allowing it to recover more funds. However, Judge Lane ruled that Genesis must prioritize paying various creditors, including federal and state regulators who claimed $32 billion, before any recovery could be considered for DCG.
Despite the repayment plan, Genesis faces a shortfall in the available cryptocurrency. The company will repay customers in crypto where possible but cannot fully cover all outstanding claims. Genesis attorney Sean O’Neal rejected DCG’s stance that customer claims should be based on the lower January 2023 cryptocurrency prices, emphasizing the position that customers should benefit from the increased asset values.
Previously, Genesis estimated that it could pay up to 77% of the value of customer claims based on future cryptocurrency price fluctuations. This court ruling aims to ensure that customers will receive repayments reflecting current market conditions, albeit not in full.
