Genesis Global, the digital assets lender that filed for bankruptcy last year, has received court approval to distribute billions in cash and cryptocurrency to its creditors.

On May 17, Southern District of New York Judge Sean Lane confirmed Genesis’ Chapter 11 repayment plan. This plan includes a structure for returning crypto assets to creditors, enabling Genesis to return customer assets that have been locked on the platform since withdrawals were paused in November 2022.

Judge Lane also dismissed a legal challenge from Genesis Global’s parent company, Digital Currency Group (DCG). As a Genesis equity holder, DCG will be the last to be repaid under Chapter 11 rules. Due to significant creditor claims, Lane ruled that DCG’s equity interest in Genesis is effectively worthless, highlighting a substantial shortfall in funds.

Genesis is one of several crypto lending firms impacted by the severe crypto market downturn of 2022.

The parent company had argued that the plan unfairly benefited Genesis creditors at its expense, suggesting that creditor claims should be based on the crypto prices when Genesis filed for bankruptcy in January 2023. At that time, Bitcoin (BTC) was trading at around $24,000. Today, it’s over $66,000. However, the judge dismissed this objection, noting that Genesis must prioritize other creditors, including federal and state financial regulators, with $32 billion in claims before distributing any funds to DCG.

Since filing for bankruptcy, Genesis has been attempting to liquidate some of its assets worth $1.6 billion after failing to reach settlements with DCG and Gemini. The company reportedly owes over $3.5 billion to its top 50 creditors, including its former business partner, Gemini.

In November 2023, Genesis announced that its parent company had agreed to repay an outstanding loan of over $300 million by April. This proposed deal aimed to resolve a lawsuit filed by Genesis in September, seeking repayment of overdue loans worth about $620 million.

While Judge Lane’s decision is a setback for DCG, Genesis creditors have broadly supported the plan. The bankrupt crypto lender estimated that creditors who lent digital assets could recover up to 77% under its proposal, significantly more than if DCG had prevailed.

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