DCG files objection to Genesis, NYAG settlement

Digital Currency Group (DCG) has filed an objection to a caller colony statement betwixt its bankrupt subsidiary, Genesis, and the New York Attorney General’s Office (NYAG).

The objection, submitted connected Feb. 21, raises concerns astir the settlement’s adherence to the Bankruptcy Code and its implications for the rights of DCG arsenic a creditor and equity holder.

DCG’s objections

Genesis precocious reached a colony with the NYAG that includes a outgo program for unsecured creditors based connected plus valuation astatine the clip of distribution.

However, DCG’s objection highlights a departure from modular bankruptcy procedures, which typically basal specified payments connected the valuation astatine the petition date. The Supreme Court has antecedently ruled that settlements cannot contravene the Bankruptcy Code, a stance DCG emphasizes successful its filing.

The institution argues that the colony unfairly prioritizes unsecured creditors astatine the disbursal of secured creditors and equity holders similar DCG, perchance depriving them of a just accidental to retrieve their investments.

According to the filing:

“By allocating each residual worth successful the debtors’ estates to unsecured creditors, the colony undermines the equitable attraction of each stakeholders, including DCG.”

DCG, arsenic the sole equity holder successful Genesis, asserts its presumption arsenic a secured creditor and insists that the colony statement was concocted without owed information of each creditors’ rights.

DCG’s objection besides criticizes the colony for being negotiated successful secrecy and hastily, without a thorough valuation of the merits of the claims oregon an effort to maximize the worth of the property for each progressive parties.

The steadfast has requested that the tribunal hold support of the colony until its concerns are afloat addressed.

NYAG lawsuit

New York Attorney General Letitia James initially filed the suit successful October 2023 implicit allegations that Genesis, on with DCG and its CEO Barry Silbert, had engaged successful fraudulent activities that misled investors and concealed important fiscal losses.

Following further complaints, the NYAG filed an amended complaint earlier this month, alleging that these entities defrauded investors retired of an further $2 billion, bringing the full to much than $3 cardinal successful losses for implicit 230,000 investors.

Genesis reportedly reached a colony statement with the NYAG successful aboriginal February, astir the aforesaid clip arsenic the ailment was amended. The institution has also settled the SEC lawsuit implicit akin allegations related to its Gemini Earn program.

The station DCG files objection to Genesis, NYAG settlement appeared archetypal connected CryptoSlate.