I hope y’all had a better weekend than Digital Currency Group and CEO Barry Silbert.Late Friday, Judge Sean Lane ruled against DCG’s objection to a settlement between the New York Attorney General’s office and bankrupt lender Genesis. “Given the size of the creditor claims, DCG is out of the money as an equity holder by billions of dollars, even if the Court valued creditor claims using the method DCG proposes,” the judge wrote Friday.The judge also ruled to confirm the liquidation plan proposed by Genesis.For those of you who haven’t been following along with this bankruptcy (and there are many moving pieces with this one), DCG wasn’t super happy with the bankruptcy plan or settlement proposed by the Genesis estate. The crypto company called the settlement agreement “subversive,” and said that the settlement was a “back-door attempt to circumvent US bankruptcy law.” Though, clearly, the judge overseeing the case doesn’t agree.The settlement plans to return assets to customers of Gemini’s Earn program and other creditors instead of government authorities.The bankruptcy plan, DCG said, favored a “small controlling group of creditors” and stripped the company of “valuable economic and corporate governance rights.”The plan would return roughly $3 billion in cash and assets to customers.Lane, in the Friday ruling, essentially said “too bad” to these claims. Perhaps more importantly, DCG is just out of the money in this case.“In overruling DCG’s objection, the Court ultimately concludes that its objection is a result oriented one based on DCG’s lack of recovery as an equity holder under the Plan,” he wrote. “There are nowhere near enough assets to provide any recovery to DCG in these cases.”Despite its arguments to the contrary, DCG was unable to convince the court that the NYAG settlement wasn’t “reasonable and appropriate.”As for the claim that the plan “favors” a small group of creditors? “DCG cannot complain that unsecured creditors are being paid before equity, as such creditors are entitled to be paid before equity may receive any recovery,” Lane wrote.DCG and Genesis have exchanged objections throughout the first half of this year. The Friday filing also marked yet another defeat for DCG, which had also sought to consult on the offloading of over $1.6 billion worth of Grayscale’s bitcoin ETF earlier this year. During a hearing in February, Lane said that the firm was “not in an ideal position” to offer “advice tainted by its own interest,” though he added that he couldn’t blame the company for said interest.Now, putting the drama aside and focusing back on the bankruptcy plan: The boom in crypto prices will benefit creditors with claims in US dollars because they’re anticipated to receive “100% of their loan balance,” according to the filing.But creditors can also be paid out in crypto as well, unlike other bankruptcies such as FTX.The rise in crypto prices increased the estate asset value by $1 billion, Lane wrote. A February testimony confirmed that there was an “an additional $900.5 million available for in-kind distribution.”But the Friday filing doesn’t mean that everything can proceed. DCG can still appeal the decision from Lane. Based on the back and forth we’ve seen, it wouldn’t be a surprise if they did.— Katherine RossThe US Congress drew headlines last week as it moved crypto-friendly regulation to completion — and the chamber may do it again in the coming days.As Blockworks’ Casey Wagner reports, a number of pieces of crypto-related law remain in flux. But one measure, the Financial Innovation and Technology for the 21st Century (FIT) Act, is set for a floor vote this week.After clearing the Rules Committee, which sets the stage for final consideration, the measure is likely on the track to success. The real outstanding question here is whether the measure will attract the kind of bipartisan support that might smooth the landing in the Senate, Congress’s upper chamber. Remember: 21 Democrats crossed the aisle to pass Congress’ repudiation of SAB 121. This arguably set the stage for the dozen Democrats who passed the Senate version despite opposition from President Joe Biden — who threatened a veto — and Massachusetts Senator Elizabeth Warren, a leading anti-crypto voice in the chamber. As expected, the industry came out in force in favor of the FIT Act. A letter issued Friday represented a who’s-who of industry groups and companies active in Washington, DC. The groups have an obvious incentive to throw their weight behind the measure. The bill mandates a crypto regulatory framework under the shared auspices of the CFTC and the SEC and one that calls for regulators, among other things, to consider innovation as they oversee a burgeoning tech sector. It’s arguably the best shot at passing industry-shaping legislation before the election season heats up, even if the bill isn’t perfect in the eyes of some.“We recognize that FIT 21 will introduce new compliance challenges for digital assets companies, but regulatory clarity is indisputably more responsible, safer for consumers, and preferable to the status quo,” the signatories noted. A new Congress takes over in January, resetting the legislative calendar, meaning that in-progress bills would need to be refiled — and all that momentum regained.It’s not certain that the Senate would take up an approved House bill — with or without demanded changes — or that Biden would sign it. But last week’s rapid approval of the SAB 121 overturn was, in many ways, a remarkable one, and a sign that crypto issues are being taken seriously. Stay tuned.— Michael McSweeneyBased on the eras in which they reached popularity, you’d think that Seinfeld and crypto would have nothing in common (though I truly believe that Kramer would be super into crypto).Boy, am I glad to tell you that’s not the case.On Friday, the New York office of the DOJ put out a press release announcing that a “cryptocurrency personality” pleaded guilty to wire fraud. As it turns out, Thomas Sfraga — aka TJ Stone — swindled folks out of roughly $1.3 million. The Seinfeld connection? He claimed to be the owner of Vandelay Contracting. For those of you who haven’t watched Seinfeld, one of the main characters, George Costanza, claimed to interview at Vandelay Industries and elsewhere used Art Vandelay as a fake name. Obviously, the crimes are no joke and Sfraga’s guilty plea proves it. It also shows that crypto always has some wiggle room for humor. But maybe next time, go for a reference that isn’t from a storyline where the character is attempting fraud? Just a thought. (And, for the record: not advice of any kind!)— Katherine Ross
