Genesis Global, the digital assets lender that filed for bankruptcy last year, has been granted court approval to distribute billions in cash and cryptocurrency to creditors. This significant development comes after Southern District of New York Judge Sean Lane confirmed Genesis’ Chapter 11 repayment plan, including arrangements for returning crypto assets to creditors.

Court Decision Clears Path for Asset Return

Judge Lane’s decision paves the way for Genesis to return customer assets held since withdrawals were paused in November 2022. Additionally, the judge dismissed a legal challenge from Genesis Global’s parent company, Digital Currency Group (DCG), citing a lack of legal standing to dispute the Chapter 11 plan.

As an equity holder in Genesis, DCG stands to be repaid last under Chapter 11 rules. Judge Lane determined that due to substantial creditor claims, DCG’s equity interest is effectively worthless, highlighting a significant shortfall amounting to billions of dollars.

Disputed Objection Overruled

DCG had contested the repayment plan, suggesting that creditor claims should reflect crypto prices at the time of Genesis’ bankruptcy filing in January 2023. However, Judge Lane dismissed this objection, emphasizing the priority of other creditors, including regulatory bodies with significant claims.

Genesis Strives to Resolve Bankruptcy Challenges

Genesis, like several other crypto lending firms, faced challenges amid the 2022 crypto market downturn, resulting in halted withdrawals and creditor claims totaling over $3.5 billion. The company has been working to liquidate assets and reach settlements with creditors, including DCG and former business partner Gemini.

Setback for DCG; Support from Creditors

While Judge Lane’s ruling represents a setback for DCG, creditors have broadly supported Genesis’ proposal, which estimates digital asset lenders could recover up to 77% under the plan. This outcome contrasts with the alternative scenario had DCG’s challenge succeeded.