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Digital Currency Group objected late Monday to the bankruptcy plan of its subsidiary Genesis Global Capital, saying that the crypto lender is proposing to pay its customers more than they are legally entitled to, Reuters reported. DCG argued that Genesis should pay its customers and creditors no more than the value the crypto assets had in January 2023, when Genesis filed for bankruptcy. Genesis has instead proposed giving its customers "additional payouts" to account for the rising price of assets like bitcoin and etherium, which violates U.S. bankruptcy law, DCG said. According to DCG's objection, assets like bitcoin have risen substantially in value since Genesis's January 2023 filing, potentially allowing Genesis to repay customers based on deflated January 2023 prices and still have assets left over to pay DCG. "DCG cannot support a plan that is unlawful and deprives DCG of its corporate governance rights," DCG said in a statement. Genesis is proceeding with a liquidation of its assets after failing to reach settlements with DCG, its former business partner Gemini, and regulators suing the three companies over their business practices. Genesis has since reached a more limited settlement with the U.S. Securities & Exchange Commision, agreeing to pay the agency a $21 million if it has any assets left over after fully repaying its customers.

Sen. Elizabeth Warren (D-Mass.) has asked the Justice Department’s bankruptcy watchdog to join forces with the tort claimants committee in its appeal to throw out prison healthcare provider Tehum Care Services’ chapter 11 case, WSJ Pro Bankruptcy reported. Warren on Wednesday sent a letter to Tara Twomey, director of the Executive Office for U.S. Trustees, and Kevin Epstein, U.S. Trustee for the Southern and Western District of Texas. In that letter, Warren said the committee, in its motion to dismiss, argued persuasively that the case is a “bad-faith attempt to defraud creditors, many of whom faced serious injury or death” under Corizon Health. Corizon split into two in 2022 — Tehum and operating business YesCare — using a controversial legal tactic known as the Texas Two-Step. Tehum filed for chapter 11 in February last year, carrying into bankruptcy court debts and liabilities to prisoners, healthcare providers, insurance companies and others accumulated by Corizon. YesCare, among the nation’s largest providers of healthcare in prisons and jails, operates business as usual, while malpractice lawsuits filed against Corizon by former and current inmates were paused because of Tehum’s bankruptcy.

Three people have been charged with orchestrating a SIM-swapping scam that siphoned more than $400 million from FTX as the cryptocurrency exchange spiraled into bankruptcy, Bloomberg News reported. Hours after FTX filed for bankruptcy in November 2022, and its founder Sam Bankman-Fried resigned, hackers drained hundreds of millions of dollars worth of digital currency from the platform, before funneling it through a web of decentralized exchanges. Bankman-Fried, who is facing decades in prison after being convicted of fraud late last year, distanced himself from the hack, but speculated that it could have been an inside job. Turns out it wasn’t, prosecutors say. The Department of Justice charged Robert Powell, of Illinois, Emily Hernandez, of Colorado, and Carter Rohn, of Indiana, last month with participating in a SIM-swapping ring that targeted FTX and other individuals over a two year period. SIM swappers have repeatedly identified victims in the crypto world and FTX’s lax security — pointed out by the company’s new CEO after he took over — appeared to make it a prime target. According to the indictment filed in federal court in Washington, D.C., Powell, Rohn and Hernandez collected personal data of about 50 victims and used the information to convince cell phone providers to port the victims’ phone numbers to a dummy phone in their possession. In doing so, the trio could intercept text messages — including multi-factor authentication codes, which allowed them to break into the victims’ financial accounts and crypto wallets. The indictment does not name FTX, but two people familiar with the case confirmed it was in fact “victim company-1” in the court filings.

Crypto lender Genesis Global has settled a U.S. Securities and Exchange Commission lawsuit over its defunct Gemini Earn lending program, agreeing to a $21 million fine that will be paid only if Genesis is able to fully repay customers in its bankruptcy, Reuters reported. The deal will help Genesis avoid the costs and risks of defending itself from an SEC lawsuit that had accused the company of illegally selling securities. The settlement will allow Genesis to focus on repaying customers and other creditors, according to documents filed in U.S. Bankruptcy Court in Manhattan on Wednesday evening. Genesis did not admit or deny wrongdoing in the settlement agreement. The SEC sued Genesis the week before it filed for bankruptcy protection in January 2023, claiming that Genesis and cryptocurrency exchange Gemini Trust illegally sold securities to hundreds of thousands of investors through their jointly-managed crypto lending program, Gemini Earn. The two companies partnered in December 2020 to allow Gemini customers the chance to loan their crypto assets to Genesis in exchange for earning interest, ultimately collecting billions of dollars' worth of crypto assets from investors. The Earn program was halted during a crypto market crash in November 2023, and its failure has spurred litigation between Genesis, Gemini, and Genesis's parent company, Digital Currency Group. Gemini, run by the Winklevoss twins best known for their legal battle against Meta Platforms' CEO Mark Zuckerberg, had previously sued DCG over the failure of the companies' crypto lending partnership.

Customers and creditors of bankrupt crypto exchange FTX who can prove their losses will likely get back all of their money, the company told the judge overseeing the insolvency case, Bloomberg News reported. Restructuring advisers will need to examine the millions of claims that have been filed against FTX to weed out those that are not legitimate, lawyer Andrew Dietderich said during a Wednesday court hearing in Wilmington, Del. “I would like the court and stakeholders to understand this not as a guarantee, but as an objective,” Dietderich said. “There is still a great amount of work, and risk, between us and that result. But we believe the objective is within reach and we have a strategy to achieve it.” In addition, the team overseeing the company has dropped an effort to restart or sell the FTX crypto exchange after concluding it would cost too much, Dietderich said. Advisers ran an exhaustive process to find investors willing to restart FTX.com, but nobody would put up the cash needed to revive the exchange, he said. “The costs and risks of creating a viable exchange from what Mr. Bankman-Fried left in the dumpster were simply too high,” Dietderich said, referencing founder Sam Bankman-Fried, who shut down the crypto firm and handed control to insolvency experts in late 2022. Since then, restructuring advisers have been tracking down assets and trying to untangle a complex web of debt owed to various creditors, including customers who put cash and crypto on the trading platform. FTX’s four largest affiliates together nearly doubled the group’s cash pile to $4.4 billion at the end of 2023 from about $2.3 billion in late October.

The U.S. government filed an objection on Monday to crypto lender Genesis Global’s chapter 11 plan, saying it effectively provides a legal shield to the company and a myriad of related parties, WSJ Pro Bankruptcy reported. The U.S. Trustee, the Justice Department’s bankruptcy monitor, said in a filing with the U.S. Bankruptcy Court in White Plains, N.Y., that the plan fails to meet certain requirements needed for confirmation under bankruptcy code. The plan also contains a provision that, in effect, serves as a “hidden third-party release,” the DOJ said. The crypto lender, which filed for bankruptcy in January of last year, is aiming to get its chapter 11 liquidation plan confirmed in mid-February. Genesis said it had more than 100,000 creditors and owed roughly $5.1 billion a few months before its bankruptcy filing. Lawyers for the company didn’t immediately respond to a request for comment. In its filing, the DOJ said the plan’s release provision is overly broad, appearing to effectively impose a “nonconsensual release on every person and every entity existing in the world.” The provision binds even those who didn’t check the opt-in box in the ballot, the DOJ said. In addition, the Genesis plan seeks to give the parties legal cover for actions taken before and after the bankruptcy filing, including Genesis’s out-of-court restructuring efforts, the filing said. “The court simply is not at the vantage point to make that judgment,” the DOJ said in the filing.