Key points to remember
- Genesis, Digital Currency Group and Gemini announced yesterday that they have reached an agreement in principle.
- The restructuring plan involves Genesis Global Trading being integrated into Genesis Global Holdco.
- Gemini will contribute up to $100 million to make Gemini Earn customers whole.
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After weeks of tense back-and-forth, Digital Currency Group, Genesis and Gemini appear to have reached an agreement on a possible restructuring plan, which still needs to be approved by the court.
A positive step
Genesis seems to have found a solution to its current solvency problems.
The bankrupt crypto credit company announcement that it had reached, with parent company Digital Currency Group, an agreement in principle with its creditors, including the crypto exchange Gemini.
According to the press release, the deal involves Digital Currency Group exchanging an existing $1.1 billion note due in 2023 for convertible preferred stock to be issued under 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 aggregate total value of approximately $500 million. .
Additionally, Digital Currency Group is required to contribute its stake in Genesis Global Trading (the trading arm of Genesis) to Genesis Global Holdco (the crypto lending business that filed for bankruptcy on January 19), effectively consolidating all Genesis entities under the same holding company.
In return, Gemini, Genesis’ largest creditor, agreed to pay $100 million to ensure Gemini Earn users get their funds back in full. Genesis and Gemini set up the Earn Program in December 2020 to provide Gemini customers the opportunity to lend their crypto assets to Genesis and earn interest on them. However, Genesis froze its redemption services the aftermath of FTX’s collapse; Gemini co-founder Cameron Winklevoss has repeatedly claimed that Genesis owes Gemini Earn customers over $900 million.
While the deal remains subject to court approval, the news marks a positive step in addressing Genesis’ liquidity issues. Earlier in the year Winklevoss published open letters on Twitter accusing Digital Currency Group CEO Barry Silbert of defrauding Gemini Earn clients, even calling on the board to remove him from his post.
Disclaimer: At the time of writing this article, the author of this article owned BTC, ETH, and several other crypto assets.