Genesis Global Capital, a cryptocurrency trading and lending firm, has received court approval to refund $3 billion to its customers. This follows the company's financial troubles in November 2022, largely due to its significant exposure to Three Arrows Capital (3AC) and the failed crypto exchange FTX.

The company's issues began about 20 months ago when it stopped allowing deposits and withdrawals on its platform, leading to its Chapter 11 bankruptcy filing in the United States. However, the situation has taken a positive turn as US Bankruptcy Judge Sean Lane has approved Genesis’s reorganization plan.

This plan involves returning 77% of the company's debts to customers in both cash and digital assets. Despite opposition from various parties, including Genesis’s parent company, Digital Currency Group (DCG), and its Crypto Creditors Ad Hoc Group, the court moved forward with the plan.

DCG, along with other groups, had filed a complaint with the US Bankruptcy Court in New York, arguing that Genesis should repay a lower percentage to its customers, including those in the Gemini Earn program, which Genesis ran with Gemini. They also argued that repayments should be based on the crypto asset prices at the time of Genesis’s bankruptcy declaration in January 2023, when Bitcoin was valued at around $24,000.

Judge Lane, however, dismissed these complaints and ruled in favor of Genesis’s restructuring plan. This decision requires the company to repay $3 billion to its affected customers and creditors, marking a significant step in addressing its liquidity crisis. The judge also noted that creditors owed fiat currencies like the US dollar would be treated differently from those owed cryptocurrencies.

The court document states that because of the rise in digital asset prices since the resolution, creditors with US dollar claims will receive 100% of their loan balance, while those with crypto claims will face a shortfall. Despite the approval to return nearly 80% of customers' funds, Genesis does not have enough digital assets, like Bitcoin and Ethereum, on its balance sheet to allow full recovery for those who lent their crypto assets to the firm. The company's bankruptcy plan includes provisions on how it plans to address the remaining shortfall.

The court also ruled that DCG, lacking legal standing, could not challenge the bankruptcy plan and thus was excluded from the list of entities eligible for payouts. The court pointed out that the Debtors’ estates didn't have enough value to allow DCG any recovery as an equity holder after unsecured creditors were paid.

With the plan approved, Gemini is set to begin refunding customers affected by the Genesis liquidity crisis through its Earn program. Gemini welcomed the approval, announcing that it would start distributing funds to customers next month. About 97% of the owed funds will initially be disbursed, ensuring that customers receive the exact amount of digital assets they originally deposited on the platform.

In conclusion, this court approval marks a critical step towards resolving the financial troubles of Genesis, providing much-needed relief to its customers and setting a precedent in the handling of such cases in the cryptocurrency sector.