- The bankruptcy court has finally approved Genesis’ Chapter 11 plan.
- Judge Sean Lane dismissed DCG’s objections against the bankruptcy plan.
- Per the plan, users affected by the collapse will receive reimbursements soon.
The Gemini Earn nightmare appears to be nearing its end after bankrupt crypto lender Genesis secured court approval for its Chapter 11 plan on Friday, despite objections from its parent company, Digital Currency Group (DGG).
After over a year of users’ assets stuck in limbo, the approval looks to propel them closer to full recovery as soon as next month.
Genesis Secures Major Win
On Friday, May 17, US Bankruptcy Judge Sean Lane did not heed the slew of objections against Genesis when approving its Chapter 11 plan, which seeks to return over $3 billion in cash and assets to creditors this year.
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The development marks a significant milestone for Genesis and Gemini Earn users, who have been waiting for reimbursement for over a year following the chaos stirred by the collapse of Terra Luna and Three Arrows Capital.
While DCG particularly opposed the proposal, Judge Lane did not hesitate to dismiss complaints against Genesis’ Chapter 11 plan.
Court Dismisses DCG’s Objections Against Genesis
DCG, Genesis’ parent company, did not approve of the new Chapter 11 plan. It argued that claims should have been valued in US dollars at the time of the company’s bankruptcy filing in January 2023, bypassing the crypto industry’s gains over the past year and a half.
However, Judge Lane shut down DCG’s objections, claiming that the parent company had “no economic stake” in the case. He also wrote, “The record here clearly establishes that there is not sufficient value in the Debtors’ estates to provide DCG a recovery as equity holder after unsecured creditors are paid.”
Judge Lane further highlighted that Genesis’ approved plan involves a multi-step process to allocate assets based on whether users were owed US dollars or cryptocurrency. He pointed out that, due to the rise in digital asset prices since the resolution was reached, creditors with claims in crypto would bear some “shortfall.”
“Due to the increase in the price of digital assets after a resolution was reached, it is currently anticipated that those creditors whose claims are denominated in U.S. dollars will be receiving 100% of their loan balance (deferring payment of post-petition interest) while creditors with claims in cryptocurrency will bear the shortfall in funds,” Judge Lane wrote.
Now, despite DCG’s objections, Genesis can reimburse its patient customers.
Gemini Earn Claimants to Receive Reimbursement Soon
Following the news, Winklevoss twin-led exchange Gemini celebrated the Chapter 11 plan approval, calling it a “welcome decision.” The platform, however, did note that the ruling did not impact global settlement among Gemini, Genesis, and other creditors in the Genesis Bankruptcy previously approved by the Bankruptcy Court.
As per the approval, Gemini Earn creditors will receive their owed assets at the beginning of June. Gemini announced that approximately 97% of owed funds will be repaid initially, with payments made as in-kind reimbursements. This means that a customer who deposited one bitcoin into Gemini Earn will receive one bitcoin back rather than the US dollar value of the token at a specific date.
The approach starkly contrasts FTX’s bankruptcy plan, which values users’ claims when the exchange filed for bankruptcy in November 2022.
On the Flipside
- Genesis is slated to pay the SEC a $21 million fine from remaining bankruptcy funds to resolve the regulator’s lawsuit.
- Genesis recently agreed to a settlement deal with the NY AG office.
Why This Matters
The approval of the bankruptcy plan is a major win for users affected by Genesis’ collapse. It presents them with a concrete, strategic roadmap outlining the timeline for recovering their funds.
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