- DCG has taken Genesis to court.
- DCG has reservations about the latter’s bankruptcy plan.
- The development comes as Genesis seeks to offload billions in Grayscale shares.
Digital Currency Group (DCG) has opposed the bankruptcy exit plan of its subsidiary crypto lender Genesis, faulting the proposal for seeking to overpay unsecured creditors.
The development comes after Genesis sought the court’s approval on February 2 to offload nearly $1.6 billion in Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE) and Grayscale Ethereum Classic Trust (ETCG) shares.
DCG Faults Genesis’s Bankruptcy Plan
In a recent court filing, DCG objected to Genesis’s bankruptcy plan, arguing that the crypto lender sought to pay creditors more than they are legally entitled to. The company reiterated that it would only support a plan that “pays creditors one hundred cents on the dollar.”
“The Debtors, in concert with the UCC and Ad Hoc Group, have devised a cramdown plan that pays unsecured creditors hundreds of millions of dollars more than the full amount of their petition date claims—and which disproportionately favors a small controlling group of creditors over others—in violation of the Bankruptcy Code,” the court document read.
DCG claimed that the bankruptcy plan strips it “of other valuable economic and corporate governance rights,” further violating the Bankruptcy Code and “demonstrating a lack of good faith.”
Further, the filing labeled Genesis’s bankruptcy plan “the product of a clandestine process” achieved through “months of backroom discussions,” which excluded DCG.
“It is no accident that this process resulted in a structure that disenfranchises the equity interests, imposes a distribution plan that gives the general unsecured creditors practically limitless upside potential on the appreciation of digital assets right up through the final distributions, and puts forth a sham waterfall that conceals this fact,” DCG wrote.
Based on these and other arguments, DCG wants the bankruptcy court to deny the confirmation of Genesis’s bankruptcy plan.
Read how DCG repaid Genesis:
DCG Successfully Repays All Genesis Short-Term Loans
Stay updated on DCG’s agreement with Genesis to settle $620M lawsuit:
DCG Reaches Agreement with Genesis to Settle $620M Lawsuit