According to Bloomberg, authorities in New York have proposed a plan that would prioritize Genesis creditors in the Chapter 11 repayment queue, regardless of whether the debts are repaid in cryptocurrency or fiat currency.
Genesis, which faces bankruptcy, has suggested returning Bitcoin and other tokens to affected clients, although a judge may require repayment in cash.
In addition, major Genesis creditors have agreed to revised valuation procedures for digital assets, reflecting their increased market value since the Chapter 11 filing in January 2023. This differs from other bankrupt cryptocurrency firms, which valued digital assets at the time of filing.
However, Digital Currency Group opposes Genesis’ proposed liquidation plan, citing concerns over the preferential treatment of certain creditors in Chapter 11. Genesis plans to seek approval for the New York settlement and the liquidation plan from Judge Sean Lane on February 14.
The Earn program, criticized by the SEC for offering unregistered securities, allowed customers to earn interest by loaning their digital assets.
James, who accused Gemini of inadequate risk disclosure regarding Earn program lending, alleged that Genesis and Digital Currency Group attempted to conceal over $1 billion in losses following the collapse of cryptocurrency hedge fund Three Arrows Capital—all claims denied by the companies involved.
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