Digital Currency Group (DCG) called the agreement between New York and subsidiary Genesis a “subversive agreement.”
Last week, DCG raised objections to non-existent cryptocurrency lender Genesis’ intentions to sell some $1.6 billion in assets. Among them were stakes in Grayscale Ethereum Trust (ETHE), Grayscale Ethereum Classic Trust (ETCG) and Grayscale Bitcoin Trust (GBTC).
DCG claimed that Genesis failed to comply with relevant regulations and that the agreement improperly diverted funds to preferred creditors. Moreover, the settlement represents a “backdoor attempt to circumvent U.S. bankruptcy law,” the group argued.
Genesis earlier this month reached a deal with the New York Attorney General’s office. In an initial statement, the embattled exchange said the deal would dispel allegations that it had defrauded investors.
On Wednesday, former senior New York federal lawyer Jason Brown expressed support for DCG ‘s objection in a separate filing. He assured that the settlement should not lead to the abandonment of the talks.
“In any case of this magnitude, I would expect the parties to conduct a comprehensive assessment of the merits of the claims before finalizing a settlement.”
Brown worked with the New York Attorney General to oversee the office’s operations and legal practice. During his tenure, he oversaw many aspects of NYAG‘s operations, including settlement negotiations.
He added that Genesis should have undertaken an improved process that included the preparation and exchange of detailed analyses of potential settlement values.
In October, Genesis sought protection from creditors and filed for Chapter 11 bankruptcy in the Southern District of New York. The exchange said it would provide $150 million in cash to finance the company’s bankruptcy and repay creditors.
