Genesis’ New Liquidation Plan Is a Material Swerve, U.S. Government Says

• Genesis is now focused on liquidation after making material changes to its bankruptcy plans last week, the U.S. government has said.
• The change threatens to delay bankruptcy proceedings further.

An updated bankruptcy plan filed by crypto lender Genesis last week represents a significant change of plans, the U.S. government said in a filing on Wednesday. The lender is now seeking to liquidate its assets rather than reorganize them.

The apparent U-turn by Genesis – made after the crypto lender and its parent company Digital Currency Group (DCG) were sued by the New York Attorney General (NYAG) – could add extra delays to the wind-up process, the filing by U.S Trustee William Harrington said. DCG is also CoinDesk’s parent company.

“The prior plan provided for the sale of assets of the debtors and a non-debtor affiliate, a discharge of the debtors, and the reorganization of any unsold assets for the benefit of the claim holders,” said Harrington, a Department of Justice official with responsibility for bankruptcy cases. “The liquidating plan provides for the liquidation of all three debtors … the debtors have substantially and materially modified the sale plan.”

Harrington argued creditors will need more time to digest the impact of the significant changes made on Oct. 24 before deciding whether to approve them in a vote.

The bankruptcy, which commenced in January, has stumbled over how to treat over $1.65 billion Genesis is owed by DCG. In a filing made last week, Genesis said a DCG deal is now “not a viable route” after NYAG Letitia James accused DCG, Genesis and business partner Gemini of defrauding investors.

The three companies have all denied James’ charges. A spokesperson for Genesis did not immediately respond to a request for comment on the latest filing.