In response to the rising coin prices, Genesis seeks to pay back customers more, DCG shouts "violates US bankruptcy law"
According to a report by Reuters, DCG opposes the proposed payout plan by its bankrupt subsidiary Genesis Global Capital. Genesis suggested offering "additional payments" to customers due to the rise in asset prices such as Bitcoin and Ether, but DCG believes that this violates the US bankruptcy law and deprives DCG of its governance rights.
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DCG stated that Genesis proposed to offer "additional payments" to clients due to the rise in asset prices such as Bitcoin and Ether, which violates U.S. bankruptcy law. DCG believes:
The amount paid by Genesis to clients and creditors should not exceed the value of the crypto assets at the time of Genesis's bankruptcy filing in January 2023.
DCG also believes that this action would deprive DCG of its governance rights.
Due to Genesis's failure to reach a settlement with its former business partners Gemini and DCG, regulatory authorities have filed lawsuits against these three companies for their business practices and are currently liquidating their assets.
Last week, Genesis also filed a motion in court seeking approval to sell its Grayscale Trust assets, including nearly $1.4 billion worth of GBTC, as well as $200 million worth of ETHE and ETCG.
Genesis reached a settlement agreement with the U.S. Securities and Exchange Commission (SEC), agreeing to pay a civil penalty of $21 million to the agency if there are surplus assets after full repayment to clients.
However, compared to the situation with bankrupt exchange FTX, Genesis seems to have a more lenient standard for client repayments. FTX insists on calculating repayment amounts based on cryptocurrency prices since November 2022, despite protests from dozens of FTX clients. U.S. bankruptcy judge John Dorsey rejected these client complaints at a hearing, approving the use of 2022 prices by FTX, stating:
I have no discretion on this matter. U.S. bankruptcy law is very clear that debts must be repaid based on the company's value at the time of bankruptcy filing, and I am obligated to adhere to it.
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