Gemini and DCG Group Reach An Agreement on the Restructuring of Genesis
After a lot of infighting and bittiness between crypto lending platform Genesis and crypto exchange Gemini, the two players have reached an agreement for the restructuring process.
As part of the restructuring process with the creditors, Digital Currency Group (DCG) is now planning to sell Genesis Global Trading and its bankrupt lending business Genesis Global Capital.
Cleary Gottlieb attorney Sean O’Neal said that the restructuring process has been designed to “maximize the recoveries to the estate”. Genesis creditors are expecting an 80% recovery under the proposed restructuring plan. The additional recovery of funds will depend on a convertible preferred equity note as well as the realized liquidation prices based on the assets of Genesis Global and DCG.
As per the terms of the agreement DCG would exchange its $1.1 billion note which is due in 2032 for convertible preferred stock issued by DCG. As part of the restructuring, DCG would refine its existing term loans via a new, junior secured term loan in two tranches payable to its creditors with an aggregate sum total of approximately $500 million.
Out of the two tranches, one denominated in U.S. Dollars will have a pay of 11.5% interest and another denominated in Bitcoins will have a pay of 5% interest. DCG has also agreed to issue a type of convertible preferred stock, however, the specifics of this issuance aren’t available yet.
Derar Islim, Interim CEO, Genesis said: “I am grateful to the talented team at Genesis for their ongoing dedication and commitment to client service, and excited about working together to build Genesis for the future. I also want to express my deep appreciation to all of our clients for their continued patience and loyalty as we work through a resolution for our lending business.”
Following the collapse of crypto exchange FTX back in November 2022, crypto lending platform Genesis Global faced heavy withdrawals following which, it has to suspend withdrawals citing liquidity issues and eventually file for bankruptcy.
Cameron Winklevoss, the co-founder of crypto exchange Gemini, has expressed displeasure at the situation in the past. During his hearing on Monday, February 6, Cameron tweeted: “This plan is a critical step forward towards a substantial recovery of assets for all Genesis creditors. In addition, Gemini will be contributing up to $100 million more for Earn users as part of the plan, further demonstrating Gemini’s continued commitment to helping Earn users achieve a full recovery”.