The two firms have finally agreed on a restructuring plan.
Key Takeaways
- Genesis, Digital Currency Group, and Gemini announced yesterday they had reached an agreement in principle.
- The restructuring plan involves Genesis Global Trading being brought under Genesis Global Holdco.
- Gemini will contribute up to $100 million to making Gemini Earn clients whole.
After weeks of tense back-and-forths, Digital Currency Group, Genesis, and Gemini seem to have reached an agreement as to a possible restructuring plan—which still needs court approval.
A Positive Step
Genesis appears to have found a solution to its current solvency issues.
The bankrupt crypto lending company announced that it had reached, along with parent company Digital Currency Group, an agreement in principle with its creditors, which include crypto exchange Gemini.
According to the press release, the agreement entails Digital Currency Group exchanging an existing $1.1 billion note due in 2023 for convertible preferred stock to be issued as part of Genesis’ bankruptcy plan. Digital Currency Group will also refinance its current 2023 term loans through new term loans issued in two tranches (one denominated in dollars, the other in Bitcoin) for an aggregative total value of about $500 million.
Additionally, Digital Currency Group is required to contribute its equity interest in Genesis Global Trading (Genesis’ trading arm) into Genesis Global Holdco (the crypto lending business which filed for bankruptcy on January 19), effectively bringing all Genesis entities under the same holding company.
In return, Gemini—Genesis’ biggest creditor—has agreed to put up $100 million to insure that Gemini Earn users will fully recover their funds. Genesis and Gemini set up the Earn program in December 2020 to offer Gemini customers the possibility of loaning their crypto assets to Genesis and earn interest on them. However, Genesis froze its redemption services in the immediate aftermath of FTX’s collapse; Gemini co-founder Cameron Winklevoss has repeatedly claimed that Genesis owes Gemini Earn customers over $900 million.
While the agreement remains subject to court approval, the news marks a positive step in seeing Genesis’ liquidity difficulties being resolved. Earlier in the year Winklevoss published open letters on Twitter accusing Digital Currency Group CEO Barry Silbert of defrauding Gemini Earn clients—even calling for the company board to oust him from his position.
Disclaimer: At the time of writing, the author of this piece owned BTC, ETH, and several other crypto assets.
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