Crypto lender Genesis Global received a significant victory in bankruptcy court on Friday, securing approval for its liquidation plan that will return approximately $3 billion in cash and cryptocurrency to its customers. The ruling, however, delivers a blow to Genesis’s owner, Digital Currency Group (DCG), which will receive no recovery from the bankruptcy.

U.S. Bankruptcy Judge Sean Lane overruled DCG’s objection to the plan, which centred on the valuation of crypto assets. DCG argued that customer claims should be capped at the value of cryptocurrencies in January 2023, when Genesis filed for bankruptcy. Crypto prices have surged since then, with Bitcoin, for example, rising from $21,084 in January 2023 to its current price of around $67,000.

Judge Lane rejected DCG’s argument, stating that even with the lower valuation, Genesis would have to prioritise paying other creditors, including federal and state financial regulators with claims totalling $32 billion, before distributing funds to its equity owner.

“There are nowhere near enough assets to provide any recovery to DCG in these cases,” Judge Lane wrote in his ruling.

Genesis aims to return funds to customers in cryptocurrency wherever possible, although it lacks sufficient crypto assets to fully repay all outstanding claims.

Sean O’Neal, an attorney representing Genesis, refuted DCG’s assertion that customers could be paid in full based on the lower January 2023 valuations. “We don’t buy into the idea that claims are capped at the petition date value,” O’Neal stated.

Genesis initially estimated in February that it could repay up to 77% of the value of customer claims, subject to future fluctuations in cryptocurrency prices.

This court approval marks a significant step forward in the resolution of Genesis’s bankruptcy, providing much-needed relief to its customers while leaving its owner, DCG, without any financial recovery.

Venezuela’s Ministry of Electric Power announced it would disconnect all cryptocurrency mining farms from the national power grid (SEN, Sistema Electrico Nacional). The measure aims to control the high energy demand from these mining farms and ensure reliable service for citizens.

AlbertoNews, a local media outlet, reported the announcement on May 18.

“The purpose is to disconnect all cryptocurrency mining farms in the country from the SEN [National Electrical System], avoiding the high impact on demand, which allows us to continue offering an efficient and reliable service to all the Venezuelan people,”

the Ministry reported in its account in Instagram.

Notably, the announcement followed the seizure of 2,000 cryptocurrency mining machines in the country. This action is part of the government’s ongoing anti-corruption campaign. Leading to the arrests of several officials from state institutions.

Corruption with the National Superintendency of Cryptoassets

The National Superintendency of Cryptoassets (Sunacrip) has been under a restructuring board since the arrest of Superintendent Joselit Ramírez. Ramírez has connections to Tareck El Aissami, former Petroleum Minister and former president of Petróleos de Venezuela (PDVSA).

On that note, El Aissami was charged with treason, embezzlement, misuse of influence, money laundering, and criminal association.

Venezuela power grid issues and cryptocurrency mining

Venezuela has faced an ongoing electricity crisis since 2009, worsened by massive blackouts in 2019 that left cities without power for up to seven days. Frequent power outages have negatively affected the country’s quality of life and economic activities.

Therefore, Governor of Carabobo state, Rafael Lacava confirmed restrictions on cryptocurrency mining farms due to their significant electricity consumption. He urged residents to report illegal cryptocurrency mining operations to prevent power shortages.

“If you, neighbor, see a house that you know, tell that person to turn off the farm, or else report it, because when they turn off the light, because you have to give light to a man so that he can earn some reales (money), you are left without electrical service.”

– Rafael Lacava

As reported by AlbertoNews, experts attribute the crisis to poor maintenance and inadequate investment in the power grid. Meanwhile, the government blames sabotage and has promised to modernize the state-controlled power network.

Overall, Bitcoin (BTC) and cryptocurrency mining are known worldwide for their high energy consumption. Countries like China and Cazaquistan have banned the activity to preserve their power grids, centralizing mining in fewer locations.

Therefore, the fewer countries allowing this activity, the higher the security concerns will be, as a few miners dominate block discovery.