The latest update on the financial woes facing Genesis Global, a well-known name in the cryptocurrency lending space, and its parent company, Digital Currency Group (DCG), suggests that the two entities appear to be on their way out of the woods, striking an agreement with creditors.
The Road to Recovery for Creditors
Recent court filings show the agreement marks a turning point that could ensure stakeholders have a fair chance to recoup their investments. Recent statements by Genesis Global and Digital Money Group have given hope to many creditors.
According to the filing in the U.S. Bankruptcy Court for the Southern District of New York, unsecured creditors will recover a significant portion of their claims.
For those holding claims in U.S. dollars, expect recoveries to fluctuate between 70% and 90%. Additionally, for those claiming to be rooted in a particular digital asset, the recovery rate is expected to be between 65% and 90%.
Digging into monetary details, the agreement includes the settlement of approximately $630 million in unsecured loans with a maturity date of May 2023. Additionally, the agreement includes approximately $1.1 billion in unsecured promissory notes expected to be issued in 2032.
DCG’s Status and Wider Impact
DCG’s reaction to the whole episode was one of relief and forward-looking optimism. DCG expressed satisfaction in a statement sent to Reuters, saying:
DCG is pleased to have reached an agreement in principle with Genesis and the Committee of Unsecured Creditors that will provide the framework for a comprehensive resolution of the claims in Genesis’s Chapter 11 case and provide creditors with access to substantial recovery.
It’s important to remember that Genesis had financial troubles back in January, leading them to file for bankruptcy. At the time, the company’s liabilities to creditors were approximately $3.4 billion.
However, a glimmer of hope emerged in February when Genesis agreed in principle to a restructuring plan with the support of DCG and key creditors, notably Gemini.
In related news, DCG, under the leadership of CEO Barry Silbert, is actively seeking to dismiss a lawsuit brought by its former collaborator, the cryptocurrency platform Gemini. The legal conflict began in early 2023 and centered around the collapse of the “Project Earn” that ended with Genesis.
In a filing with the US Southern District of New York, both Silbert and DCG asked Judge Lewis Liman to consider invoking the Federal Rules of Civil Procedure to dismiss the lawsuit.
According to Bitcoinist, citing Bloomberg, Silbert and his cryptocurrency venture claimed that Gemini did not provide substantial evidence to support their fraud allegations. Silbert also expressed concern that the Winklevoss twins, Cameron and Taylor, were trying to tarnish his reputation.
Bankrupt Genesis had previously teamed up with Gemini to beef up its “earn program” that would allow users to earn returns on their digital assets. After the company went bankrupt, users were unable to withdraw their funds, sparking controversy that led to legal action against Gemini.
Featured image from Unsplash, chart from TradingView
