Genesis aims to close a deal with creditors News ▸ US ▸ Gemini ▸ Bankruptcy
Genesis aims to close a deal with creditors
Genesis has "confidence" it can resolve disputes with creditors this week. The lender is looking to exit bankruptcy by May 19.
2 min read
Updated: Jan. 24, 2023 at 7:44 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Crypto lender Genesis — after filing for bankruptcy on Jan. 20 — is hoping to reach a deal with its creditors by this week, Reuters reported.
If the lender fails to resolve its differences with creditors, however, it will ask the court to appoint a mediator, according to Genesis counsel Sean O’Neal at the bankruptcy hearing on Jan. 23.
First-day motion approved
The judge approved various first-day motions by Genesis, including payment to employees and vendors — a common practice in bankruptcy proceedings.
Genesis’ lending arms — Genesis Global Holdco, Genesis Asia Pacific, and Genesis Global Capital — have been in discussions with creditors for roughly two months since it halted customer withdrawals in November 2022.
The discussions have included Genesis’ parent company Digital Currency Group (DCG) — which owes nearly $1.7 billion to Genesis, according to Bloomberg. DCG’s debt to Genesis includes around $575 million in loans due in May 2023, and a $1.1 billion promissory note due in June 2032.
Before filing for bankruptcy, Genesis was yet to reach a consensus on how it was going to pay back creditors. Genesis lawyers said they have gone through “15 iterations of various term sheets” since the lender froze withdrawals.
But Genesis has “some measure of confidence” that it would be able to wrap up negotiations with creditors this week, O’Neal said at the hearing. He added:
“Sitting here right now, I don’t think we’re going to need a mediator. I’m very much an optimist.”
$765.9M owed to Gemini Earn users
Genesis owes $765.9 million to over 340,000 Gemini Earn users, who represent the largest claim against the lender.
Chris Marcus, a lawyer for Gemini and some other creditors, told the judge that while “there is some work to do” before a final deal is reached — he is “cautiously optimistic” a mediator will not be required to resolve the issues.
Genesis plans to exit bankruptcy in 4 months
O’Neal said that Genesis is hoping to exit Chapter 11 bankruptcy by May 19. The lender plans to sell its assets at auction and/or raise additional financing to emerge out of bankruptcy.
If successful, Genesis creditors would potentially receive cash, digital assets, and equity shares from brokerage accounts along with proceeds from the auction.
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Monika Ghosh
In 2020, Monika immersed herself in crypto, maintaining skepticism yet firmly believing blockchain could address key issues like financial disparity and transparency. A book-lover, she's also a passionate food enthusiast.
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Genesis
Genesis is an institutional digital asset markets and a full-service digital currency prime brokerage providing a single point of access for select qualified individuals and global institutional investors.
Digital Currency Group
Digital Currency Group’s mission is to accelerate the development of a better financial system.
Gemini
Gemini is a regulated digital asset exchange and custodian that allows customers to buy, sell, store, and stake digital assets in a regulated, secure, and compliant manner.