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Genesis, DCG Reach Deal With Creditors — Is the Saga Over?

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Teuta Franjkovic
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Key Takeaways
  • Digital Currency Group and Genesis creditors strike a deal on bankruptcy petition
  • Repayment plan targets 70%-90% recovery in USD.
  • It also sees 65%-90% in-kind, based on asset value.
  • Transaction seeks to resolve DCG’s $630M and $1.1B commitments by 2032.

According to a court filing on Tuesday, August 29, Genesis Global and Digital Currency Group (DCG) have achieved an agreement in principle on a bankruptcy restructuring plan already approved by creditors.

Following its entry into mediation in May to settle disagreements on a reorganization plan, Bitcoin lender hopes to exit Chapter 11 protection. After reaching an agreement with the Official Committee of Unsecured Creditors and its parent company, Digital Currency Group (DCG), Genesis said in the court filing that mediation had come to an end.

Replacing Unsecured Debt with New Loans

In accordance with the agreement , DCG will give Genesis creditors new funding worth around $1.4 billion. This consists of a loan for $328.8 million, a second-lien loan for $830 million, and installment payments totaling $275 million. The new loans would take the place of current DCG unsecured debt.

Proposal’s value-dependent: 70-90% USD or 65-90% in-kind recovery for unsecured creditors, tied to market rates and legal processes.

DCG gets liability releases. Creditors’ committee won’t pursue claims against parent in Three Arrows Capital losses.

Parties are finalizing agreements and documents for an updated Chapter 11 plan, including the settlement.

Creditors can opt for early cash settlements under the reorg plan announced Tuesday, with further dividends as assets are monetized.

Winklevoss Offers $1.4Bn to End DCG Dispute

In the July 4 ‘Open Letter to Barry Silbert’, Cameron Winklevoss, a co-founder of Gemini, asserted that the DCG company engaged in “fraudulent behavior” through a “culture of lies and deceit” at the expense of Gemini’s 232,000 Earn users

Winklewoss then said “the games are over” and added DCG has spent over $100 million on professional expenses, all of which have gone to attorneys and advisors at the expense of creditors and Earn customers, in addition to prolonging the resolution process.

Gemini co-founder was blunt about the incident’s nature, saying that it takes a particular type of person to owe $3.3 billion to hundreds of thousands of people and feel like a victim.

“Sam Bankman-Fried was not even close to being capable of such an illusion,” he  then said .

The declarations set a deadline: Silbert must accept by July 6 at 4 PM ET or face legal consequences. The situation is intriguing as it resolves a dispute among key industry players.

Genesis Filed Bankruptcy, Owing Over $3.5 Bn

In January 2023, Genesis, one of many crypto lending companies impacted by the severe bear market of 2022, filed for bankruptcy . To its top 50 debtors, which included companies like Gemini and VanEck’s New Finance Income Fund, the corporation owed more than $3.5 billion.

Just for reminder, Genesis stopped allowing withdrawals in the middle of November 2022, citing unheard-of market turbulence caused by the failure of the FTX cryptocurrency exchange.

The corporation asserted that the incident led to “abnormal” withdrawals that exceeded its available cash.

The Genesis Lenders and Gemini, participants in the mediation, haven’t yet approved the interim agreement. Genesis stated it’s pursuing further discussions with holdouts and a completely consensual plan.

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Teuta is a seasoned writer and editor with more than 15 years of experience. She has expertise in covering macroeconomics and technology as well as the cryptocurrency and blockchain industries. She has worked for several publications as a journalist and editor, including Forbes, Bloomberg, CoinTelegraph, Coin Rivet, CoinSpeaker, VRWorld and Arcane Bear. Teuta began her professional career in 2005, working as a lifestyle writer at Cosmopolitan in Croatia. From there, she branched out to several other publications, covering mainly business and the economy. She then turned her attention to the world of cryptocurrency and blockchain, believing that crypto is among the most important inventions in the history of humanity. Her involvement in fintech began in 2014 and she has since lent her expertise in writing, editing and gathering information about the world of crypto, blockchain, NFTs and Web3. An all-round news hound, mentor, editor, and writer, Teuta enjoys teamwork and good communication. She holds a WSET2 diploma and has a thing for chablis, punkrock music and shoes. She also holds a double MA in Political science and Entrepreneurship.
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