DCG and Gemini Reach Agreement to Compensate Users
According to a report from TheBlock, Digital Currency Group (DCG) has reached an agreement with cryptocurrency exchange Gemini. This comes after the collapse of Genesis, a DCG subsidiary and the Gemini Earn program, which left numerous users without funds and resulted in lawsuits.
The founders of Gemini, Cameron and Tyler Winklevoss, have been open about their negotiations and their goal of restoring their clients’ lost funds.
New Creditor Agreement Proposed
The report states that DCG and Gemini have proposed a new creditor agreement to return “all of the crypto held by the platform” when Genesis filed for bankruptcy protection. The agreement aims to compensate clients by offering them a recovery of 70-90% in digital currencies.
In addition, unlike other processes, this agreement allows users to benefit from potential price increases in Bitcoin and Ethereum. If the prices of these cryptocurrencies reach certain levels, clients will still receive an equivalent amount.
Incentivizing Creditors to Vote in Favor
The new agreement is yet to be voted on by creditors. The inclusion of the clause that allows clients to benefit from a crypto bull run is meant to incentivize creditors to vote in favor of the proposal.
GBTC Gains Aid Recovery
DCG’s $630 million loan to its subsidiary will be partially repaid in cash and through a financial instrument by 2025. Additionally, Genesis owes over $1 billion to Gemini’s clients.
Genesis has posted 60% of this amount as collateral in shares for the Grayscale Bitcoin Trust (GBTC). The potential conversion of GBTC into an exchange-traded fund (ETF) by the US Securities and Exchange Commission (SEC) has positively affected its value.
This could lead to a decrease in the discount between GBTC and the spot price of Bitcoin, benefiting Gemini Earn clients. If Gemini agrees to distribute a portion of the collateral to Gemini Earn users, it is likely that they will receive a full recovery.
Hot Take: Gemini and DCG Work Towards Making Users Whole
In an effort to compensate users affected by the collapse of Genesis and the Gemini Earn program, Digital Currency Group (DCG) and Gemini have reached an agreement. The proposed creditor agreement aims to return all crypto held by the platform and offer clients a 70-90% recovery in digital currencies.
The inclusion of a clause allowing users to benefit from potential price increases in Bitcoin and Ethereum is meant to incentivize creditors to vote in favor of the proposal. Additionally, DCG’s loan to its subsidiary and Genesis’ collateralization with GBTC shares could aid in the recovery process.
Overall, this agreement represents a significant step towards making affected users whole and resolving the issues caused by the collapse of Genesis.
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