Genesis Rebound? DCG Agrees to In-Principle Deal Offering Up to 90% Recovery

<p>Digital Currency Group (DCG) has entered into an
in-principle agreement with the creditors of its cryptocurrency lending
subsidiary, Genesis. This agreement could reportedly pave the way for
substantial recoveries, ranging from 70% to 90% in USD equivalent for unsecured
creditors.</p><p>The recent court filing
on August 29, 2023, outlines a compelling prospect for creditors of Genesis.
This includes the potential for 65% to 90% recovery on an in-kind basis.
However, the prospective recoveries are contingent upon the denomination of the
digital assets.</p><p>Recovery Prospects for
Genesis' Creditors</p><p>Additionally, to address
the existing liabilities, DCG has reportedly devised a structured repayment
plan. With around USD $630 million in unsecured loans due in May 2023 and USD
$1.1 billion under an unsecured promissory note due in 2023, DCG's strategy
involves a partial repayment agreement.</p><p>According to the court
documents, this agreement encompasses two tranches: the first totaling
approximately USD $328 million with a two-year maturity period; and the second
summing up to USD $830 million with a seven-year maturity. The calibrated approach
aims to streamline the repayment process and mitigate the financial strain.</p><p>Besides that, DCG's
resolution includes a provision for further <a href="https://www.financemagnates.com/terms/p/payments/">payments</a>. The agreement indicates
that DCG would disburse USD $275 million in four instalments subsequent to the
partial repayment agreement as part of the May 2023 maturities.</p><p>Genesis, the crypto
lending arm, faced instability following the <a href="https://www.financemagnates.com/cryptocurrency/troubled-ftx-files-for-bankruptcy-as-ceo-bankman-fried-resigns/" target="_blank" rel="follow">collapse
of FTX</a>. This led to its
suspension of withdrawals and eventual bankruptcy protection filing in early
2023. This tumultuous journey has culminated in DCG's in-principle agreement,
which is expected to resolve the claims that have plagued Genesis for months.</p><p>Genesis' Troubled Path</p><p>Recently, <a href="https://www.financemagnates.com/cryptocurrency/digital-currency-group-seeks-dismissal-of-geminis-fraud-allegation/" target="_blank" rel="follow">Finance
Magnates</a> reported that
DCG had <a href="https://www.financemagnates.com/cryptocurrency/digital-currency-group-seeks-dismissal-of-geminis-fraud-allegation/" target="_blank" rel="follow">sought
a dismissal of Gemini's fraud allegation</a>. The dispute focuses on Gemini's Earn program,
which allowed retail customers to earn interest by lending their
<a href="https://www.financemagnates.com/terms/c/cryptocurrencies/">cryptocurrencies</a> to Genesis. The <a href="https://www.financemagnates.com/cryptocurrency/news/three-arrows-capital-gets-liquidation-order-from-bvi-court/" target="_blank" rel="follow">collapse
of 3AC</a> in June 2022 and
the subsequent ripple effects, including the downturn of FTX, adversely
impacted Genesis' operations.</p><p>"Debtors, DCG, and
UCC have reserved rights with respect to the 3AC-related liabilities, and any
potential claims the debtors or DCG have against the other party with respect
to the 3AC's liabilities are fully preserved," the latest court filing
stated.</p><p>In July, the cryptocurrency
exchange, Gemini <a href="https://www.financemagnates.com/cryptocurrency/gemini-sues-dcg-ceo-barry-silbert-over-genesis-debit-from-earn-program/" target="_blank" rel="follow">sued
Digital Currency Group (DCG)</a> and
its CEO, Barry Silbert. The lawsuit, filed in the New York court, contends that
both parties were involved in 'encouraging and facilitating' fraudulent
activity through Genesis.</p><p>However, in response to
the lawsuit, DCG dismissed Gemini's claims as a 'publicity stunt' orchestrated by
Cameron Winklevoss, Gemini's Co-Founder. DCG firmly denied any wrongdoing,
asserting that the accusations were baseless and defamatory.</p>

This article was written by Jared Kirui at www.financemagnates.com.