Digital Currency Group, the parent company of bankrupt crypto lender Genesis, reached an agreement to pay out up to 90% of the amount owed to Genesis customers with the help of new loans.
In a Tuesday court filing, lawyers for DCG wrote that the company has reached an agreement in principle with Genesis Global Holdco and the committee representing unsecured creditors (mostly customers) in the bankruptcy proceedings to repay Genesis’s $630 million in unsecured loans along with a $1.1 billion unsecured promissory note due in 2032, as well as certain other potential claims. The agreement could result in Genesis customers recouping 70% to 90% of what they are owed in U.S. dollars.
To repay Genesis’s debts, DCG said it would take on two new loans, a $328.8 million first-lien facility with a two-year maturity and an $830 million second-lien facility with a seven-year maturity. These loans are secured by collateral put up by DCG, which also intends to pay multiple installments of $275 million. The plan still has to be approved by the bankruptcy court before it’s implemented.
“We look forward to executing on this important milestone and for Genesis to begin its distributions to creditors,” DCG wrote in a statement.
— Digital Currency Group (@DCGco) August 29, 2023
Genesis first halted withdrawals in November following the collapse of crypto exchange FTX. In January, it was reported that the company owed more than $3 billion to creditors, including crypto exchanges Coinbase, Kraken, and Blockchain.com.
The company filed for bankruptcy in late January, joining other crypto companies like Celsius and Voyager Digital that were hit hard by a downturn in crypto prices.
Genesis’s parent company, DCG, which also owns the media company CoinDesk and investment manager Grayscale, is also in a protracted conflict with Tyler and Cameron Winklevoss’s crypto exchange Gemini. In a public letter, Gemini cofounder Cameron Winklevoss claimed in January that DCG owed the company more than $1 billion, which included funds Genesis was supposed to pay out to Gemini customers through its now defunct Earn product.
On Tuesday, DCG got a win after a federal court ruled that the SEC unreasonably denied Grayscale’s proposal to launch a spot Bitcoin ETF.
