Genesis has received court approval to distribute a total of $3 billion in cash, Bitcoin and altcoins to its creditors as part of its bankruptcy process. This development is considered a significant milestone after the bankruptcies that have deeply affected the cryptocurrency sector.
Bitcoin company begins repayments
Genesis, which filed for Chapter 11 bankruptcy protection in January 2023, was severely damaged by the collapses of Three Arrows Capital and FTX. The company owed over $3.5 billion to its top 50 creditors. Initially, there was skepticism in the market about the possibility of fully compensating customers. However, the court ruling brought significant relief to creditors. The payment to creditors covers approximately 77% of customer claims. This rate varies by asset type. Genesis claims for Bitcoin or Ethereum are traded between 97-110% for high-value claims and 74-94% for low-value claims. Fiat or stablecoin claims are also met at similarly high rates.
For creditors left in the shadow of the Genesis bankruptcy, the recovery odds are like a lottery. Bitcoin and Ethereum investors are in the middle of the pack, while Solana investors are less so. However, stablecoin and US dollar investors are in a different situation: They will be the jackpot winners. For example, Bitcoin owners will get back just over half of their assets (51.28 percent), while Ethereum owners will get back about two-thirds (65.87 percent). Solana investors will get back about one-third (29.58 percent). However, for creditors with debts in stablecoins or US dollars, the situation is clearer: These investors will get back all of their losses.
No payment to DCG
However, despite this positive development, Genesis’ parent company, Digital Currency Group (DCG), will not receive any payment. The court ruled that DCG did not have enough value in the debtors’ properties to provide any recovery. This decision has sparked significant debate in the cryptocurrency industry. DCG initially argued that customer claims should be limited to the value of cryptocurrencies. However, the court rejected this argument and ruled in favor of the creditors.
This distribution made by Genesis to creditors is considered an important signal for the cryptocurrency market. This development can contribute to the restoration of confidence in the sector and the increase of investors’ interest in cryptocurrencies. However, considering the lengthy and complex nature of bankruptcy processes, uncertainties in the sector have not been completely eliminated. As a result, the distribution made by Genesis to creditors is considered an important turning point in the cryptocurrency sector. This development provides relief for both creditors and the sector in general, while also sending important signals about the future of the cryptocurrency market.
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