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Genesis Capital’s settlement has a new obstacle after an initial agreement was approved. Two months following the initial agreement, the settlement has been disrupted by creditors.
Digital Currency Group, the parent company of Genesis, released a statement noting that the cryptocurrency firm has filed for a motion for mediation in response to the new disruption. Genesis filed for bankruptcy in New York at the beginning of the year.
According to Digital Currency, the disrupted settlement could be as a result of renewed demands previously made by creditors:
“More than two months after all parties agreed to a comprehensive settlement that was submitted by Genesis Capital to the Bankruptcy Court, a group of Genesis Capital’s creditors have reengaged and raised all new demands… We do not know if the hundreds of thousands of individual creditors are aware of this development, but the latest maneuver will prolong the court process.”
DCG Statement on Genesis filing Motion for Mediation
— Digital Currency Group (@DCGco) April 25, 2023
Two months ago, Genesis Capital had submitted the “comprehensive settlement” to the Court. This was agreed “in principle” by both Genesis’ parent company and its creditors. In the initially agreed settlement plan, Genesis creditors were set to receive 80% of the funds they had lost from Genesis’ bankruptcy. Now, Genesis’ creditors are raising their demands, which has halted the court process and put a pin in the agreement. Digital Currency noted that they find it hard to understand the reason from the “limited engagement” with the creditors in the last few months only to be met with the putting the initial agreement aside.
Digital Currency also noted that it is hoping to find and reach a fair settlement deal that works for all parties. This means undertaking all new demands, despite the “agreement”.
Other companies in the cryptocurrency space suffered similar fates to Genesis’ bankruptcy early in the year. After the crash of FTX and subsequent financial moves, the industry faced a liquidity crisis. This has led to several heavy hitting names in the industry struggling to find funding including Gemini, the Winklevoss twins exchange.