Genesis signs $2 billion deal to settle bankruptcy and compensate customers

The company, specializing in the digital asset lending market, was ordered to repay several billion dollars to its customers after going out of business.

Endgame for Genesis Global. The cryptocurrency lending company signed an agreement with a New York court on Friday (May 17) to repay $2 billion in cash and cryptocurrencies to its former customers as part of its liquidation following its bankruptcy.

The New York court approved Genesis’ liquidation plan. He rejected the objection of Digital Currency Group, the company’s parent company ($50 billion in assets under management), which had argued that Genesis should not pay its customers and creditors more than the value of the assets digital assets under management in January 2023, when Genesis filed for bankruptcy.

“Once again, we see the real-world consequences and damaging losses that can occur due to a lack of oversight and regulation within the cryptocurrency industry,” said Letitia James, Attorney General of New York in her statement. .

The New York Attorney General announced the creation of a victims’ fund to “help defrauded investors.” According to the court, at least 29,000 New Yorkers were victims of the company by losing $1.1 billion through its Gemini Earn program (which allowed cryptos to be loaned against the payment of interest).

The victims’ fund will receive money from Genesis’ remaining assets after initial bankruptcy distributions to creditors. If these are not repaid based on the current value of the digital assets, the victims’ fund will receive up to $2 billion from Genesis’ remaining assets. The Victims’ Fund will then make distributions to compensate Genesis’ creditors for the full and equitable amount of their actual losses until the Victims’ Fund is exhausted. The company, however, said it does not have enough money to return everything it owes to its customers. The company is now banned from operating in New York.

The deal still needs approval from the New York bankruptcy court.