Genesis Creditors Dispute Takes Center Stage as Mediation Extended in Bankruptcy Case
Digital Asset Lender Genesis Faces Delays and Disagreements Amid Bankruptcy Proceedings
Wed, 07 Jun 2023, 01:40 am UTC
As Monday's proceedings unfolded in the U.S. Bankruptcy Court, Judge Sean Lane found himself at the center of a heated dispute involving digital asset lender Genesis and its creditors. The influence of Digital Currency Group (DCG), Genesis' parent company, in the impending restructuring process created uncertainty, prompting Judge Lane to extend the mediation duration.
Originally slated to conclude last month, the mediation process has now been pushed to June 16. On May 1, Judge Lane appointed a mediator to facilitate discussions between Genesis, which is now insolvent, and its creditors. This decision came after unsuccessful talks earlier this year. DCG, the parent entity of Genesis and CoinDesk, played a significant role in the proceedings. However, not all parties agreed with the judge's decision to prolong the mediation timeframe. Gemini, a crypto exchange and former business associate of Genesis, was among the dissenting parties. Genesis had filed for bankruptcy in January in New York's Southern District.
Gemini's legal team expressed concerns about the extended dialogue causing further financial harm to those affected by the bankruptcy. Anson Frelinghuysen, a representative for Gemini from Hughes Hubbard & Reed, emphasized the mounting financial strain each delay imposes on individual investors. He conveyed the growing frustration of Gemini and its Earn users, stating that their patience was wearing thin.
In November, central crypto exchange Gemini halted withdrawals from accounts associated with its crypto lending service, Gemini Earn, after Genesis ceased operations due to a borrower failure involving crypto exchange FTX and debts amounting to billions of dollars.
During the hearing, Gemini Earn customers affected by Genesis' financial troubles voiced their grievances regarding the decision to prolong the mediation. Judge Lane, however, declined requests to involve bankrupt crypto exchange FTX, which claims a significant $3.9 billion debt from Genesis, in settlement discussions. Instead, he granted additional time for the parties involved to construct a revised proposal to determine the allocation of settlements among the various Genesis creditors.
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