Digital Currency Group Proposes Attractive New Genesis Offer

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  • Digital Currency Group has proposed a new creditor agreement in the ongoing Genesis bankruptcy proceedings
  • The new plan would allow Gemini Earn users to fully recover their cryptocurrency holdings from the platform
  • All unsecured creditors could see 70%-90% recovery, with a significant portion in digital currencies.

Digital Currency Group (DCG) has proposed a new creditor agreement in the ongoing Genesis bankruptcy proceedings that could enable Gemini Earn users to recover all of their cryptocurrency holdings from the platform. This development is the latest chapter in the ongoing saga between Barry Silbert’s DCG and counterparties that lent to Genesis Global, a saga that is closing in on its one-year anniversary and may finally be on the verge of reaching a satisfactory conclusion.

Unsecured Creditors Could Get Up to 90% Back

DCG revealed its new plan in a filing submitted to the bankruptcy court on Wednesday, offering a framework for creditors which could see it provide “all unsecured creditors with a 70-90% recovery, with a significant portion of the recovery in digital currencies.” This represents the second agreement in principle, with the previous proposal involving DCG equity, something that has not been deemed as attractive by creditors.

Under this new agreement, creditors would also have the opportunity to benefit from the appreciation of cryptocurrencies, potentially receiving circa “$85,000 for BTC and $8,500 for ETH.” DCG hopes that this incentive will encourage creditors to accept the new deal and bring an end to the ongoing battle. In a statement, DCG described the proposed return rates as exceptional, particularly considering the volatility of the cryptocurrency industry.

Pending creditor approval, the new agreement aims to revise the terms of a $630 million loan between Genesis and DCG, under which a portion of the loan will be repaid in cash shortly after the agreement’s closure, with the remainder structured as a two-year note.

Genesis owes approximately $1.1 billion to Gemini Earn customers, who make up nearly 99% of all claimants, according to DCG representatives. These creditors hold a slightly better position than others due to collateral that Genesis provided to Gemini as part of their business relationship, including about 31 million shares of GBTC, which has appreciated significantly and now represents approximately 60% of the total owed to Gemini Earn clients.

Gemini Earn Customers in Line for Full Payout

In total, Gemini Earn creditors could potentially recover up to 110% of their claims, with the agreement suggesting that if Gemini contributes $100 million, as previously indicated, or even a portion of the collateral to Gemini Earn users, it would likely result in a full recovery for them.

DCG argues that Gemini has not fulfilled its promise to enhance the recovery for Gemini Earn users and states that the firm “is not contributing a single penny to provide Gemini Earn users a better recovery.” The remaining balance could be covered by assets held by Genesis, including cash, stablecoins, and payments from DCG in the form of longer-term notes.

Should this offer be deemed in the creditors’ best interests by the bankruptcy court, the next stage should see claimants offered the opportunity to vote on the agreement and hopefully allow all parties to take the first meaningful step towards resolution.