DCG Objects Settlement Between NY Attorney and Failed Genesis
Crypto VC Digital Currency Group (DCG) has called the settlement between subsidiary Genesis and New York as a “subversive arrangement.”
Last week, DCG raised objections to defunct crypto lender Genesis’s plans to sell its assets amounting to around $1.6 billion. The assets included shares in Grayscale’s Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Grayscale Ethereum Classic Trust (ETCG).
In a fresh filing on Wednesday, DCG submitted its objection to Genesis’s proposed settlement with New York attorney general office.
DCG contended that Genesis did not follow proper legal processes and the agreement falsely diverted funds to preferred creditors.
“[Genesis] cannot, under the guise of a “settlement,” take value from lower classes and redistribute it to preferred creditors in violation of absolute priority.”
Furthermore, the settlement is a “back-door attempt to circumvent U.S. bankruptcy law,” the group argued. The Genesis’s parent company stressed that the settlement had been secretly created, characterizing it as a “subversive arrangement.”
Genesis entered into a deal with the office of the attorney general in New York early this month. The beleaguered exchange said in its preliminary statement that the deal will resolve charges that it had defrauded investors.
In a separate filing on Wednesday, Jason Brown, an ex-senior federal attorney in New York, expressed support to DCG’s objection.
He asserted that the settlement in his opinion is not in the usual course to forgo discussions.
“In any case of this magnitude, I would expect the parties to have engaged in extensive merits-based assessments of the claims prior to finalization of a settlement.”
Brown worked alongside the New York Attorney General to manage the legal
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