Genesis Global Restructuring Completion

Genesis Global and its related entities announced the completion of their restructuring process on Friday after filing for bankruptcy protection in January 2023. The firm has begun distributing approximately $4 billion worth of digital assets and U.S. dollars to repay creditors, as stated in a press release.

When it filed for bankruptcy last year, Genesis disclosed having over 100,000 creditors and liabilities of up to $10 billion. The company owed approximately $3 billion to its top 50 creditors, which include crypto exchange Gemini, asset manager VanEck, and trading firm Cumberland.

Wallets connected to Genesis began transferring $1.5 billion worth of Bitcoin and Ether on Friday. The firm has reached out to creditors with instructions on how to receive these funds.

On average, Genesis creditors will recover 64% of their in-kind cryptocurrency repayments, though this varies by coin. Bitcoin creditors will receive 51.28% of their Bitcoin back, Ethereum creditors will receive 65.87%, and Solana creditors will receive 29.58%. Those owed stablecoins or U.S. dollars will receive 100% of their funds, according to the company.

“Creditors will be entitled to additional recoveries following the initial distribution, depending on the results of ongoing claims reconciliation, contractual rights against third parties, and litigation,” the firm stated.

In May, Gemini announced that its clients received full payouts from Genesis, which managed the assets in Gemini’s “Earn” product that was shut down after Genesis’ insolvency.

Genesis was among many firms affected by the market contagion following the downturn of 2022. Over-leveraged or poorly managed businesses began defaulting after the collapse of Terra, leading to the catastrophic failure of the FTX crypto exchange.

Initially impacted by the downfall of the Three Arrows Capital hedge fund, Genesis received a loan and a $1.1 billion promissory note from its parent company, Digital Currency Group, to remain operational. However, further losses related to convicted fraudster Sam Bankman-Fried’s Alameda Research forced Genesis to halt withdrawals and file for bankruptcy.

DCG and Genesis are currently involved in a civil lawsuit from New York Attorney General Letitia James, who claims the firms defrauded investors by misleading them about Genesis’ solvency and concealing issues on its balance sheet.