Gemini Claims DCG Owes $630 Million and Fails to Pay

Gemini Claims DCG Owes $630 Million and Fails to Pay

Gemini raises concerns over DCG’s potential default on a $630 million payment obligation, while also considering forbearance options to prevent a default amid Genesis’ bankruptcy proceedings.

Gemini has raised concerns over DCG’s failure to honor the $630 Million payment obligation. The payment in question relates to a loan provided by Gemini to Genesis, a crypto-lending subsidiary of DCG. Genesis is as of now undergoing bankruptcy proceedings.

Company Is warning of Potential Default by DCG and Considers Forbearance Options

Gemini announced a warning recently, expressing concern that DCG can potentially default on its obligations if it doesn’t make the required payment or restructure its debt. In an update on its website, the exchange led by the Winklevoss twins stated it is as of now evaluating the option of granting forbearance to DCG, along with creditor committees, to prevent a default. 

The decision to provides forbearance will partly depend on whether all parties believe DCG will negotiate in good faith for a consensual deal. If no resolution is reached, the cryptocurrency exchange is seeing as presenting an independent “amended strategy of reorganization” without DCG’s consent. A spokesperson from DCG mentioned that they are actively engaged with stakeholders in the Genesis Financial resources restructuring process during the 30-day mediation period starting May 1.

In a recent court filing, bankrupt lender Genesis requested an extension from the  United States Bankruptcy Court for the Southern District of New York. The lender indicated that the extension was necessary to secure a restructuring process that maximizes value and avoids disruption from competing plans.

Genesis emphasized the size and complexity of its case as grounds for the court to provides the extension. The lender revealed whole lot of assets and liabilities on its balance sheets that would undergo restructuring.

In addition, Genesis noted that its engagement in the digital investment industry adds another layer of complexity to its proceedings. The lender must consider the ever-evolving regulatory landscape in its case.

The purpose of this extension is to allow more time for the involved parties to navigate the bankruptcy proceedings and facilitate the ongoing efforts to accomplish a restructuring that maximizes value. The court filing indicated that the extension intends to prevent the disruption caused by introducing a competing plan.

If approved, Genesis will have until August 27 to file the reorganization strategy. On the other hand, Gemini will have until October 26 to accept it. Additionally, the Gemini is preparing “the Gemini Master Claim.”  The strategy seeks to recover over $1.1 Billion worth of digital currencies that it believes Genesis owes.

Gemini Threatens Legal Action Over Frozen Withdrawals and Loan Repayment

Reports by Gemini, Genesis has refused to return funds to approximately 232,000 users who participated in the Gemini Earn program and had active loans as of January 19, 2023. Gemini Earn was a high-yield financing service offered by the exchange, with Genesis serving as a primary lending partner before freezing withdrawals in November 2022.

Earlier in the year, Gemini threatened legal action against both DCG and its CEO, Barry Silbert, if no plans were presented to repay Gemini’s $900 Million loan to the cryptocurrency lender.

Earlier in the 30 days, the cryptocurrency lender Gemini filed a case against DCG, claiming the payment was in default.

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