Digital Currency Group (DCG) Opposes Genesis’ Bankruptcy Plan Over Asset Valuation Dispute
DCG opposed Genesis’ bankruptcy plan claiming that it overpays, by factoring the rising values of assets like Bitcoin and Ethereum.
Digital Currency Group (DCG) has lodged a formal objection against the bankruptcy plan proposed by its subsidiary, Genesis Global Capital, citing a contentious disagreement over asset valuation. In a late Monday statement, DCG contended that Genesis‘s plan to allocate additional payouts to its customers exceeds its lawful entitlement.
At the heart of the dispute lies the valuation of crypto assets, with DCG insisting on pegging repayments to the value of these assets as of January 2023, the time of Genesis’s bankruptcy filing. However, as per Reuters, Genesis has advocated for accounting adjustments to reflect the appreciating prices of assets such as Bitcoin and Ethereum since January 2023, a stance DCG alleges contravenes U.S. bankruptcy laws.
Genesis Global Capital, in response, has embarked on liquidating its assets after failing to reach amicable settlements with DCG, its former business partner Gemini, and regulatory bodies.
The Securities and Exchange Commission (SEC) had initiated legal action against Genesis before its bankruptcy filing, alleging illicit securities sales through the jointly managed crypto lending program Gemini Earn.
Genesis Bankruptcy Plan Receives Support from Gemini
Support for Genesis’s bankruptcy plan has emerged from Gemini, the renowned cryptocurrency exchange helmed by the Winklevoss twins. Gemini asserts that the proposed plan offers a viable pathway to reimburse customers who have endured asset lockups exceeding 16 months.
This clash over asset valuation in bankruptcy proceedings echoes a recent legal precedent set in the Chapter 11 case of FTX. U.S. Bankruptcy Judge John Dorsey ruled in favor of valuing customer claims using cryptocurrency prices from November 2022, despite customer objections, affirming the clear parameters outlined in U.S. bankruptcy law.
The unfolding saga between DCG and Genesis Global Capital underscores the intricate legal and financial intricacies surrounding cryptocurrency-related bankruptcies. With regulatory scrutiny intensifying in this evolving landscape, the outcome of this dispute will undoubtedly have far-reaching implications for stakeholders within the crypto ecosystem.
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