Genesis Trading, a cryptocurrency lending company that fell into a liquidity crisis and had to declare bankruptcy at the end of January 2023, said it reached a debt restructuring agreement with its creditors.
According to an anonymous source cited by CoinDesk, the deal involves Genesis’s main creditors as well as its parent company, Digital Currency Group (DCG), which is run by crypto billionaire Barry Silbert. Genesis reportedly owes these main creditors approximately $2.4 billion, per CoinDesk, out of the approximately $3.4 billion in liabilities the company cited in its bankruptcy filing.
Accordingly, Genesis will convert $1.1 billion of assets lent by DCG in the form of commercial paper into preferred shares for creditors. This commercial paper was issued by DCG to rescue Genesis after the company lost more than $2.3 billion. Details of the loan conversion have not been disclosed.
In addition, DCG will extend their loan, which is in the form of $500 million in Bitcoin and cash that matures in May 2023, into two new loans with an interest rate of 11.5% on USD and 5% on Bitcoin, mature in June 2024.
CEO Cameron Winklevoss of Gemini, a platform stranded on Genesis $900 million in deposits of Earn users, said the deal was “a critical step forward towards a substantial recovery of assets for all Genesis creditors.”
Gemini announced that it would pay the exchange’s pocket money to compensate for the loss of 100 million USD for Earn users, pledging to ensure users will get the most of their money.
Gemini announced that it will contribute up to $100 million more for Earn users as part of the plan, further demonstrating Gemini’s continued commitment to helping Earn users achieve a full recovery.
With the recent controversies, Genesis and Gemini are being investigated by the SEC, as well as being sued by Earn users.