Genesis completes bankruptcy restructuring, begins distributing $4 billion in crypto and cash

Genesis Global and its related entities announced that it has completed its restructuring process on Friday, after filing for bankruptcy protection in January 2023. The firm has also begun distributing approximately $4 billion worth of digital assets and U.S. dollars to repay creditors, according to a press release.

When it filed for bankruptcy last year, Genesis disclosed it had over 100,000 creditors and had as much as $10 billion in liabilities. It owed approximately $3 billion to its top 50 creditors, including crypto exchange Gemini, asset manager VanEck and trading firm Cumberland.

Wallets connected to Genesis began transferring $1.5 billion worth of bitcoin and ether on Friday, as reported earlier by The Block. The firm said it has reached out to creditors with instructions on how to receive these funds. 

On average, Genesis creditors will recover 64% of their in-kind cryptocurrency repayments, though it will vary coin by coin. Bitcoin creditors will receive 51.28% of their bitcoin back, ETH creditors 65.87% and Solana creditors 29.58%. Those owed stablecoins or U.S. dollars will receive 100% of their missing funds, the company said.

“Creditors will be entitled to additional recoveries following the initial distribution, depending on the results of ongoing claims reconciliation, contractual rights against third parties, and litigation,” the firm wrote. 

In May, Gemini announced its clients had received full payouts from Genesis, which had been tasked with managing the assets in Gemini's "Earn" product that shutdown following Genesis' insolvency. 

Genesis was just one of many firms impacted by the market contagion event that spread following the market downturn of 2022. Over-leveraged or badly run businesses began to default following the collapse of Terra, which ultimately led to the most catastrophic failure of the FTX crypto exchange.

Genesis, initially wounded by the collapse of the Three Arrows Capital hedge fund, received a loan and $1.1 billion promissory note from its parent company, Digital Currency Group, to stay afloat. But further losses following the collapse of convicted fraudster Sam Bankman-Fried’s Alameda Research forced Genesis to close withdrawals and enter into bankruptcy. 

DCG and Genesis are currently involved in a civil lawsuit brought by New York Attorney General Letitia James, who argues the firms defrauded investors by lying about Genesis’ solvency and papering over a hole in its balance sheet.