Genesis, the bankrupt crypto lender that collapsed following the failure of the Terra/luna ecosystem and Three Arrows Capital, has completed its Chapter 11 restructuring plan as of August 2.
Under the restructuring plan, Bitcoin creditors will receive recoveries amounting to 51.28% of their claims, paid out in the original cryptocurrency. Ether creditors will see a higher recovery rate of 65.87%.
Most altcoin creditors are set to receive 87.65% of their digital assets. However, Solana creditors face a notably lower recovery rate of 29.58%. Stablecoin and cash creditors will be able to recoup 100% of their losses, paid in US dollars.
A $70 million litigation fund has also been established for creditors who may seek further legal action against third parties involved in the bankruptcy, including Genesis’ parent company, Digital Currency Group (DCG).
Genesis’ troubles stem from its involvement in institutional lending, where it borrowed funds from firms like Gemini, founded by the Winklevoss twins, and lent to entities such as Three Arrows Capital.
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The default of Three Arrows Capital materially impacted Genesis and strained the relationship between Gemini co-founder Cameron Winklevoss and DCG CEO Barry Silbert. Winklevoss publicly criticized Silbert, accusing him of fraud and poor management of the corporate conglomerate, which includes Grayscale, Foundry, Luno, and Genesis.
In addition to completing its restructuring plan, Genesis has agreed to a $21 million settlement with the Securities and Exchange Commission (SEC) for selling unregistered securities alongside the Gemini Earn program.
As part of the settlement related to Gemini Earn, creditors will start receiving the assets owed to them by the beginning of the month. Roughly 97% of owed funds will be initially repaid through in-kind reimbursements. This means that customers who deposited one bitcoin into Gemini Earn will receive that bitcoin back, rather than the U.S. dollar value of the token at a specific date.
This approach differs from FTX’s bankruptcy response, which plans to reimburse customers based on the dollar value of their claims at the time of FTX’s bankruptcy filing.
