DCG and Genesis reach initial deal to restructure plan with creditors

• The Digital Currency Group and Genesis have reached an initial deal with a group of the firm’s main creditors. 
• The agreement involves selling Genesis’ bankrupt entities and refinancing outstanding loans. 

Barry Silbert’s crypto conglomerate has started sorting out its financial affairs. The Digital Currency Group (DCG) and its leading subsidiary Genesis reached an agreement in principle for a restructuring plan with the firm’s main creditors. The deal will involve a series of sales and equities offerings aimed at easing the conglomerate’s liabilities. 

DCG will sell Genesis’ bankrupt units

According to a press release from Genesis on 6 February, the agreement is between the Digital Currency Group and a group of creditors that represent claims of more than $2 billion against the bankrupt crypto lender. The deal aims to pave the path towards bringing maximum value to the firm’s clients and stakeholders. 

As per the agreement, DCG will exchange its $1.1 billion promissory note to Genesis for convertible preferred stock, which will be issued by the parent firm as part of the subsidiary’s bankruptcy plan. The deal also involves the sale of Genesis’ lending arm and its crypto trading unit. 

Furthermore, the crypto conglomerate’s agreement with its creditors will involve the refinancing of its existing loans from its subsidiary, namely a $500 million cash loan and nearly $100 million worth of Bitcoin [BTC]. Gemini, Genesis’ largest creditor with an exposure of almost $800 million, will contribute up to $100 million for its Earn users as part of the agreement.  

Genesis’ interim CEO, Derar Islim, while talking about the agreement, 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.” 

DCG sells Grayscale shares

In other news, a report by the Financial Times highlighted that DCG had offloaded shares in several leading crypto funds at a steep discount. According to U.S securities filings seen by FT, DCG has sold its holdings in multiple investment vehicles by Grayscale. This includes the sale of the crypto conglomerate’s shares in the Grayscale Bitcoin Trust (GBTC).

The most recent share sales were focused on Grayscale’s Ethereum fund. Since 24 January, the firm has executed multiple trades. It sold as much as $22 million worth of shares, reflecting nearly a quarter of its holdings.