• Genesis Global Trading has reached a restructuring agreement with its creditors to maximize recoveries.
• The deal includes a second lien term loan facility with 11.5% interest and another tranche denominated in bitcoin at 5%.
• Gemini has agreed to contribute up to $100 million for the recovery of users of their Earn product, who still do not have access to their funds.
Restructuring Agreement Reached by Genesis
Genesis, a subsidiary of Digital Currency Group (DCG), has entered into a restructuring agreement with key creditors that would see the sale of Genesis Global Trading and other moves designed to maximize the recoveries for the estate.
Details of Deal
The deal includes restructurings of debt owed from DCG to Genesis Holdco, one of the entities that previously filed for Chapter 11 protection. These terms include a second lien term loan facility with a maturation date of June 2024. Additionally, there are two tranches: one in U.S. dollars paying 11.5% interest, and another denominated in bitcoin paying 5% interest. In addition, DCG has agreed to issue convertible preferred stock, however specifics are yet to be determined.
Causes Of Bankruptcy
The lending arm of Genesis was forced to halt withdrawals in November 2022 after contagion from the collapse of crypto exchange FTX earlier that same month; Genesis subsequently filed for bankruptcy last month and is expected to reach an agreement with creditors by the end of January 2023. As part of this fallout, withdrawals were also frozen for users on Gemini Earn who had received yield through arrangements with Genesis’ lending arm.
Response From Gemini
Cameron Winklevoss, President of Gemini, expressed his displeasure at the situation through a letter posted on Twitter addressing these issues; during today’s hearing he tweeted that Gemini will contribute up to $100 million more for recovery purposes for Earn users who still do not have access to their funds.
The restructuring agreement between Genesis and its creditors should help improve financial recoveries and pave the way forward for affected customers on both sides of this equation – those using both traditional banking services as well as cryptocurrency services such as those provided by Gemini Earn