An unsettling ripple courses through the cryptocurrency world as creditors of the crypto lender, Genesis, including digital asset exchange, Gemini, alongside its parent company, the Digital Currency Group (DCG) challenge a proposed settlement deal with accusations of manipulating the bankruptcy procedure. The gripe in the room is around the alleged positioning of a group of creditors to receive preferential treatment, thereby skewing the balance of fairness.
Genesis Global Capital, burdened by liabilities of a whopping $3.4 billion, filed for Chapter 11 this year. Following a litigious period of turbulence and uncertainty, a new, quite contentious agreement is on the table. This ongoing saga carries an undertone of skepticism, as the deal broached allows FTX’s sister company, Alameda Research to reap $175 million from Genesis’s assets— a significant plummet from an initial $4 billion claim.
Another group, cryptically dubbed the Fair Deal Group, decries the maneuver as an egregious attempt by Genesis to secure bankruptcy claim votes from the beneficiary FTX creditors. According to them, the proposed settlement is a perverse deviation from acceptable Chapter 11 protocol.
Adding to the tide of disapproval, a third group of creditors, who remain anonymous, derides the ‘enterprise push’ from FTX to recoup loans as nothing more than a shot in the dark, hoping something sticks. This faction alleges that the company owes its members a staggering $2.4 billion.
Meanwhile, Gemini views the deal from a critical lens. They argue that although the accord allows Alameda Research to claim $175 million, it also requires them to relinquish a hefty $226 million against FTX. Gemini’s association with DCG via the Gemini Earn Program has seeded into a full-blown litigation, with accusations of DCG concealing knowledge about Genesis’s bankruptcy from investors since 2022. As Gemini contends, over 232,000 of their users are owed more than $1 billion.
However, Genesis, in an interesting twist, advocates for the deal as equitable. They present it as the financial road to redemption, a route to ‘significantly smooth the path’ without the crippling costs of litigation. Genesis has consistently been under Gemini’s microscope, who espouse the belief that Genesis should lose its monopoly of proposing a windup plan. This intriguing web of alliances and rivalries in the cryptocurrency world will certainly be the one to watch, as the chips fall where they may in this high-stakes game of asset exchange.
Source: Cryptonews
