Court bars Digital Currency Group from reducing Genesis ownership during bankruptcy

Digital Currency Group, the genitor institution of bankrupt crypto lender Genesis, has been barred from reducing ownership successful the bankrupt steadfast until its bankruptcy proceedings conclude, according to a Dec. 18 court filing.

Judge Sean Lane ruled that DCG’s ownership of the distressed crypto lender was important for securing taxation benefits. These benefits hinge connected Genesis maintaining its relation with DCG, ensuring it remains portion of a tax-consolidated radical outlined successful Section 1502 of the Tax Code and related regulations.

According to the filing:

“DCG is barred from (i) taking immoderate actions that would reasonably beryllium expected to origin DCG and Holdco to nary longer beryllium portion of the taxation consolidated radical of which DCG is the communal genitor (or immoderate continuation of specified group) arsenic provided nether Section 1502 of the Tax Code and regulations promulgated thereunder, (ii) taking immoderate actions that would reasonably beryllium expected to origin Holdco to acquisition an “ownership change” wrong the meaning of conception 382 of the Tax Code.”

This improvement is the latest successful the ongoing struggle betwixt Genesis and its genitor company, DCG. In precocious November, DCG agreed to settee its outstanding $324.5 cardinal indebtedness by April 2024, aiming to resoluteness a suit that mightiness outgo it $620 cardinal payable to Genesis.

Genesis asserts that this repayment volition supply benefits by reducing litigation expenses and furnishing funds to settee creditors impacted by the bankruptcy process.

Meanwhile, CryptoSlate reported that Genesis’s reorganization program has attracted criticisms from Gemini Earn users, who mightiness get conscionable 61% of the worth of their crypto holdings arsenic of Jan. 19, 2023.

Genesis and Gemini erstwhile had an extended concern narration that progressive the Earn product. However, the firms person been astatine loggerheads during the past twelvemonth and person faced legal actions from U.S. authorities.

The station Court bars Digital Currency Group from reducing Genesis ownership during bankruptcy appeared archetypal connected CryptoSlate.