Bankrupt crypto lender Genesis has completed its restructuring process and started repaying its creditors.
Big transfers from Genesis, now we know these are for repayments
Genesis and its associated companies have announced the completion of their restructuring after declaring bankruptcy three years ago.
Genesis initially proposed a repayment plan in November last year, which faced opposition from its parent company, Digital Currency Group. DCG argued that paying creditors 77% of their deposits from the time of bankruptcy would give investors more than they were owed due to the increased value of crypto assets over the past year.
This sounds like a thief’s argument, because creditors deposited 100% of their deposits, regardless of its actual exchange rate.
Court-approved repayment plans
In May 2024, US Judge Sean Lane of the Bankruptcy Court Southern District of New York approved Genesis’s repayment plan.
The company plans to repay $4 billion in cryptocurrencies and fiat currencies to its creditors.
Bitcoin creditors will receive 51.28% of their claims in kind, Ethereum creditors will get 65.87%, and Solana creditors will be paid 29.58%.
Creditors receiving stablecoins or cash will be paid 100% of their claims in US Dollars.
On Friday, Genesis executed multiple transactions likely related to its repayment plan. Arkham Intelligence reported that Genesis moved $1.5 billion, including 16,600 BTC and 166,300 ETH.
Repayment could means new supply coming to the market
Large repayments by bankrupt crypto companies often lead to market sell-offs as creditors may quickly liquidate their newly received assets, especially if there was a prolonged time between the insolvency and the repayment.
Genesis began its repayment plan just a month after the defunct exchange Mt. Gox started settling its creditors, but Mt. Gox victims had to wait a decade.
The crypto market has shown a similar reaction, with the total market cap declining by 5.52% in the past day to $2.18 trillion.
