Digital Currency Group Proposes New Creditor Agreement for Genesis Bankruptcy
Digital Currency Group (DCG) has put forward a new creditor agreement in the ongoing bankruptcy proceedings of Genesis. The proposal aims to enable Gemini Earn users to recover all of their held crypto assets. DCG’s plan offers unsecured creditors a 70-90% recovery, with a significant portion of the recovery in digital currencies. The agreement also allows creditors to benefit from any appreciation in cryptocurrency value. This move comes as part of the battle between DCG and counterparties that lent to Genesis Global.
Genesis Creditors Could Achieve Full Recovery
The proposed agreement seeks to renegotiate the terms of a $630 million loan between Genesis and DCG. If approved by creditors, part of the loan will be repaid in cash upon closing, while the rest will be structured into a two-year note. Gemini’s Earn customers are owed approximately $1.1 billion by Genesis, accounting for nearly 99% of all claimants. Due to collateral posted by Genesis to Gemini, these creditors have a slightly better position and could receive up to 110% of their claim.
Gemini’s Role and DCG’s Accusations
Gemini has been engaged in a dispute with DCG’s subsidiary Genesis since the freezing of withdrawals from the Earn lending program. The Winklevoss twins, co-founders of Gemini, accused Barry Silbert and Genesis of misleading investors in a lawsuit. This led to investigations by the FBI and SEC into DCG. DCG claims that Gemini is not contributing any funds to improve the recovery for Gemini Earn users, despite promises made earlier.
Hot Take: DCG Offers a Promising Solution for Genesis Bankruptcy
DCG’s proposed creditor agreement presents an opportunity for Gemini Earn users to potentially recover all of their crypto assets held by Genesis. With a 70-90% recovery rate and the chance to benefit from crypto appreciation, this outcome is remarkable in the volatile cryptocurrency industry. If approved, creditors could achieve full recovery, with Gemini Earn users receiving up to 110% of their claim. However, DCG accuses Gemini of not fulfilling its promise to contribute funds for a better recovery. The ongoing battle between DCG and counterparties highlights the complex nature of the crypto credit crisis.
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