Deniz 
The bankruptcy plan of Genesis, the bankrupt cryptocurrency lender that failed following the collapse of the Terra/Luna ecosystem and Three Arrows Capital, was approved by a U.S. court yesterday, overriding the opposition of Genesis owner Digital Currency Group (DCG).
Before deciding in favor of the plan, which would repay creditors nearly $3 billion in cash and assets, US bankruptcy judge Sean Lane dismissed objections from DCG, the Genesis Crypto Creditors Ad Hoc Group, and the Office of the United States Trustee.
Bypassing almost a year and a half of gains across the cryptocurrency industry, DCG had contended that claims should be valued in U.S. dollars at the time of the company’s bankruptcy filing in January 2023.
“DCG has objected to a plan in which it has no economic stake,” Judge Lane wrote in dismissing the complaint. “After unsecured creditors are satisfied, the record here unequivocally shows that the debtors’ estates are not worth enough to give DCG a recovery as an equity holder.”
Simply put, creditors owing cryptocurrencies will be handled differently than creditors owing U.S. dollars under the plan, which calls for “a multi-step process that allocates assets to creditors by claim denomination and values these assets for distribution purposes.”
Judge Lane further said, “Due to the increase in price of digital assets after the time 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),” whereas creditors with claims in cryptocurrency will bear the shortfall in funds.
Although DCG might be able to contest the decision, Bloomberg reports, it’s not obvious what legal grounds they would have given the severe asset deficiency.
After learning of the verdict, Winklevoss twin-owned exchange Gemini issued a statement describing it as a “welcome decision,” but adding that “it does not impact the global settlement among Gemini, Genesis, and other creditors in the Genesis Bankruptcy previously approved by the Bankruptcy Court.”
The company said that as part of the Gemini Earn agreement, creditors will start getting the assets owing to them at the beginning of each month. The firm added that initially, around 97% of outstanding amounts will be reimbursed in-kind, meaning that a customer who placed one bitcoin into Gemini Earn will get that bitcoin back instead of the token’s U.S. dollar worth at that time.
This distinguishes Gemini’s bankruptcy reaction from FTX’s, which, per the present plan, will pay back consumers the dollar amount of their claims at the time FTX filed for bankruptcy.