Genesis Lenders Call DCG Offer “Unsatisfactory”


The court suspended the bankruptcy process of Genesis Global Holdco due to the disagreement of the company’s creditors with the terms of the recently proposed Digital Currency Group (DCG) deal.

The preliminary agreement between the companies implied the payment to DCG of two loans in the amount of $328.8 million with a maturity of two years and $830 million for seven years – from 70% to 90% of the funds invested by investors in dollar terms.

“DCG’s contribution to meeting creditor claims is wholly insufficient to offset even the undisputed amounts of loans owed, not to mention the valuable property claims against the company, its directors and officers, including [CEO] Barry Silbert,” the statement said.

The borrowers opposed exempting the firm and its CEO from future lawsuits and threatened to block any final bankruptcy deal that would include such proposals.

Lawyers for the Gemini crypto exchange said the terms for Genesis’s bankruptcy were “not detailed enough” and did not provide any guarantees for some of the largest creditors.

“The limited information provided by the debtors clearly shows that the proposed transaction is woefully untenable from an economic point of view,” lawyers for the trading platform said.

On November 16, 2022, Genesis froze the withdrawal of funds and the issuance of new loans. The firm cited “increased demand” from clients following the collapse of FTX and hedge fund Three Arrows Capital.

In January 2023, the firm and its subsidiaries Genesis Asia Pacific and Genesis Global Capital filed for bankruptcy. According to media reports, their liabilities exceed $3 billion. This amount includes claims from clients of the Gemini exchange for $900 million.

In May, DCG defaulted on a $630 million payment to compensate users of Gemini Earn.

Recall that in July, the Winklevoss brothers exchange filed a lawsuit against Digital Currency Group and Barry Silbert, calling the latter “the architect and mastermind of fraud.” The DCG was later asked to dismiss the lawsuit.

In August, FTX and Genesis reached an agreement to pay the latter $175 million to Alameda Research.

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