Bankrupt Genesis unsecured creditors’ committee formed – Cryptopolitan

In recent events, a seven-member committee has been appointed to represent the interests of unsecured creditors in the Genesis Global bankruptcy case, according to court filings on Feb. 4.

The committee will have a significant role in the ongoing bankruptcy proceedings, representing the creditors in court, having the right to be consulted before major decisions, and participating in the reorganization plan.

Major crypto players among committee members

The seven members of the committee are selected from a list of the twenty largest unsecured creditors. Included among them are Mirana Asset Management – an arm of crypto exchange Bybit, SOF International, Digital Finance Group, and crypto exchange Bitvavo, along with three individual creditors, Amelia Alvarez, Richard Weston, and Teddy Andre Amadeo Goriss.

Bitvavo sits among the largest creditors with over $290 million in exposure, alongside claims of $150 million from Mirana and $37 million from Digital Finance Group.

The appointment of the committee was made by William Harrington, a representative for the United States Trustee – an executive branch agency within the Justice Department responsible for monitoring bankruptcy cases.

Recall that Genesis Global Holdco and its lending business subsidiaries, Genesis Global Capital and Genesis Asia Pacific — collectively known as Genesis Capital, filed for bankruptcy on Jan. 19, citing liabilities of up to $10 billion.

The companies sought relief under Chapter 11 two months after disclosing liquidity issues due to the collapse of the crypto exchange FTX. Withdrawals have been suspended from Genesis Global Capital’s platform since Nov. 16, 2022.

Genesis parent company sued

Adding to the bankruptcy proceedings, on Jan. 24, a group of creditors filed a securities class action lawsuit against Genesis’s parent-company Digital Currency Group (DCG) and its founder and CEO, Barry Silbert, alleging violations of the federal securities laws.

The lawsuit claims that Genesis committed securities fraud through a scheme to defraud potential and existing digital asset lenders by making false and misleading statements. DCG has publicly claimed that it has absolutely nothing to do with Genesis’s bankruptcy.

In addition, Gemini is attempting to retrieve its funds after Genesis was caught off guard by the collapse of Sam Bankman-Fried’s crypto company FTX a month after it happened.

The Securities and Exchange Commission (SEC) filed charges against both cryptocurrency companies a few weeks ago, alleging that the companies sold unregistered securities in conjunction with a high-yield product that was offered to depositors.

According to the SEC, the lender lent cryptocurrency belonging to Gemini customers and paid a percentage of the gains back to Gemini. Gemini then deducted an agent charge, which was often more than 4%, and distributed the remaining profit to its users.

That product being offered by Genesis should have been registered as a security offering, the SEC said. Officials from the SEC said that the Gemini Earn program, which was financed by Genesis’ lending operations, fulfilled the requirements of the SEC’s definition since it included both an investment contract and a note.

These two characteristics are taken into consideration by the SEC when determining whether or not an offering constitutes a security.