Genesis and DCG reach in-principle agreement to recover creditors’ funds

Digital Currency Group (DCG) moving toward resolving the financial challenges of its crypto lending subsidiary, Genesis.
The agreement could possibly lead to a fair recovery for creditors.
The agreement is still subject to several handles, but Genesis expects the agreement to be completed in the coming weeks.

According to a document submitted on Monday to the US bankruptcy court in the Southern District of New York, Digital Currency Group (DCG) and Genesis Global’s creditors have struck an in-principle agreement to settle the claims that surfaced during the crypto lender’s bankruptcy proceedings.

Genesis Global Holdco, LLC, Genesis Global Capital, LLC, and Genesis Asia Pacific Pte. Ltd. voluntarily filed petitions under Chapter 11 of the US Bankruptcy Code in January 2023.

Genesis creditors to get refunds in US dollar

Genesis, the crypto lending subsidiary of Digital Currency Group (DCG), had almost $3.5 billion in debt to its top 50 creditors, one of them being Gemini, according to the bankruptcy documents. Gemini and Genesis collaborated to give its users the option to lend Genesis their cryptocurrency holdings in return for the promise of interest payments through the now-defunct Genesis Earn program.

The recently reached in-principle agreement indicates that unsecured creditors may receive a recovery of between 70% and 90% in US dollar equivalent, potentially settling lingering disputes and securing a fair recovery for creditors.

Depending on the value of the digital assets involved, the recovery on an in-kind basis is anticipated to be between 65% and 90%.

Existing Digital Currency Group liabilities

The resolution of DCG’s current obligations, which total about $630 million in unsecured loans due in May 2023 and $1.1 billion under an unsecured promissory note due in 2032, is one of the agreement’s essential components.

According to the agreement, the payback will take place in two stages: an initial repayment of about $328.8 million with a two-year maturity and a second repayment of $830 million with a seven-year maturity.

DCG has also agreed to make a further $275 million payment, which will be made in four equal installments. These payments, which will take care of the maturing debts connected with the unsecured loans due in May 2023, are scheduled to be made after the partial repayment agreement date.

Notably, neither the Ad Hoc Group of Genesis’ lenders nor Gemini support the in-principle agreement.