Crypto giant Gemini challenges Genesis bankruptcy plan amidst controversy
- The dispute was about the non-payment of approximately $630 million in loans.
- All opposing parties have called for an end to the special exclusivity period granted to Genesis.
Gemini, along with two other creditor groups, have opposed Genesis’ bankruptcy resolution plan due to its lack of specificity and inadequate assurances for major debtors. Attorneys representing Gemini argued that the plan lacks crucial details and fails to provide sufficient economic consideration for creditors.
Similarly, the Fair Deal Group, another ad hoc creditor, objected to the plan on similar grounds, emphasizing its failure to adequately secure debts owed to Genesis and its lack of a demonstrably viable strategy.
Genesis, affiliated with DCG (Digital Currency Group), initiated bankruptcy proceedings in January.
The ad hoc group of Genesis lenders also expressed concern about DCG’s role, deeming it insufficient to address even uncontested loan amounts.
Genesis’ lawyers disclosed on 29 August that unsecured creditors might receive up to 90% of the USD equivalent of their holdings. No other comprehensive details were provided.
Creditor groups cite lack of detail and economic consideration
Gemini’s objection, filed on Wednesday, sharply criticizes the recently revealed “agreement in principle” among the Debtors, the Committee, and DCG. The filing emphasizes the absence of specific information and economic considerations within the proposed agreement.
All three opposing parties call for an end to the special exclusivity period granted to Genesis. This allowed the company to negotiate its bankruptcy resolution through mediation. The filing points out that the Debtors had repeatedly promised a forthcoming plan to address claims against DCG. However, they continuously sought extensions for mediation periods and bid deadlines.
The dispute centers around the potential harm faced by Gemini due to DCG’s non-payment of approximately $630 million in loans due to the Debtors in May 2023. This situation amplifies the urgency of resolving the bankruptcy situation and obtaining a fair resolution for creditors.
Gemini’s Cameron Winklevoss engaged in a verbal feud with Digital Currency Group (DCG) after DCG attempted to dismiss a fraud lawsuit filed by Gemini over the Gemini Earn service.
DCG argued that they had minimal involvement with the program, prompting Winklevoss to claim that this admission contradicted their stance. The conflict arises from DCG subsidiary Genesis’s involvement in holding funds for Gemini Earn. It faced issues after the suspension of customer withdrawals following FTX [FTT]‘s failure in November.
Representatives from Genesis were unavailable for immediate comment in response to the objections raised by Gemini and other creditor groups. The ongoing legal wrangling raised significant questions about the viability and fairness of the proposed resolution plan. The situation remains fluid as both creditor objections and the company’s response are subject to further legal proceedings.