Per a report from CoinDesk, crypto lending firm Genesis and its parent company Digital Currency Group (DCG) are moving forward with the former’s bankruptcy process. The companies reached a “principle agreement” to restructure the lending firm.
The report cites a person familiar with the claim that DCG and Genesis convinced a group of creditors. According to the initial agreement, Genesis will have to “wind down” its loan book, and it will have to sell some of its subsidiaries.
DCG’s Plans For Crypto Lender Genesis
In addition, the principle agreement will require the DCG to “refinance” its $500 million loan in cash and its $100 million in Bitcoin from its subsidiary, according to the report. The source failed to provide further details on the deal but mentioned that the refinancing process would include the following:
(…) an equitization of the infamous 10-year promissory note that DCG gave Genesis in return for failed hedge fund 3AC (Three Arrows Capital) claims.
DCG and Genesis reached this agreement with a group of creditors representing individuals and companies with claims of over $2 billion against the crypto lending firm. Now, the entities will propose a similar agreement to other creditors, including those users that subscribed to the Gemini Earn program from crypto exchange Gemini.
What This Could Mean For Gemini Earn Users
Crypto lending firm Genesis filed for bankruptcy on January 20th following several critical events. First, the collapse of 3AC CEO Predicts How The Crypto War Between DCG And Genesis Will End. Genesis was in business with both entities.
For the former, the DCG issued a promissory note, as CoinDesk’s source mentions, to keep Genesis’ balance sheet positive and continue operations. However, the collapse of FTX was too much pressure, and the firm was forced to halt operations.
In this context, Gemini’s earn program users were locked out of their funds. The crypto exchange and its founders, Cameron and Tyler Winklevoss, have been in discussions with DCG and Barry Silbert to make their users whole.
The entities have been unable to reach an agreement, and as of this writing, it’s unclear if they will accept the initial deal and move forward. It is worth noting that Cameron Winklevoss celebrated Genesis’ bankruptcy filing as a “crucial step towards us being able to recover your assets.”
3/ The good news is that, by seeking the protection of the bankruptcy court, Genesis will be subject to judicial oversight and be required to provide discovery into the machinations that brought us to this point.
— Cameron Winklevoss (@cameron) January 20, 2023
If Gemini comes into the fold and accepts the agreement, DCG and Silbert could avoid further legal actions filed against them. Moreover, Gemini Earn users could have a higher chance of recovering their funds.