Digital Currency Group (DCG) and Genesis Enter In-Principle Deal to Settle Creditors’ Claims
The Digital Currency Group (DCG) has reached an in-principle agreement with bankrupt crypto lender Genesis to settle the claims of its creditors. Genesis had filed for Chapter 11 bankruptcy earlier this year after facing a financial crisis caused by the collapse of crypto exchange FTX.
Main Points:
- Genesis holds liabilities of $630 million in unsecured loans due in May 2023 and a $1.1 billion unsecured promissory note due in 2032.
- DCG plans to undertake new debt facilities along with a repayment agreement, including a $328.8 million first-lien facility with a 2-year maturity and an $830 million second-lien facility with a 7-year maturity.
- DCG intends to pay its creditors a total of $275 million in four installments.
- The proposed plan could result in anticipated returns of 70% to 90% for unsecured creditors in USD and a recovery range of 65% to 90% in-kind based on the denomination of the digital asset.
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Will Gemini Benefit From Genesis Settlement?
Gemini, a crypto exchange, is among the creditors affected by Genesis’ bankruptcy. Genesis owes Gemini nearly $1 billion as part of its customers’ funds. Gemini has filed a lawsuit against Genesis-parent DCG for refusing to return the funds. DCG has motioned to dismiss the lawsuit, claiming it is a continuation of the Winklevoss twins’ Twitter-based character assassination.
It remains uncertain whether the settlement plan will involve partial refunds for Gemini. Genesis has outstanding debts of around $3.6 billion to its top 50 creditors, including Gemini.
Hot Take:
The in-principle deal between DCG and Genesis could bring some relief to Genesis’ creditors and potentially lead to significant returns. However, the unresolved dispute with Gemini highlights the challenges and complexities involved in settling such cases. The outcome of this settlement will have implications for both Genesis and the cryptocurrency industry as a whole, highlighting the need for robust financial regulations and safeguards.
