Digital Currency Group (DCG) has introduced a novel proposal to assist the creditors of the now-insolvent Genesis Global, with the simultaneous aim of facilitating the recovery of nearly all claims for Gemini Earn users.
In a recent filing made on September 13, DCG outlined a plan that envisages an estimated recovery of 70–90% for unsecured creditors, with a significant portion of this recovery provided in digital currencies.
Moreover, the compensation plan suggests that Gemini Earn users could potentially see a recovery of approximately 95-110%, even without any financial contribution from Gemini. The filing by the firm asserts: “If Gemini were to agree to provide $100 million to Gemini Earn users under the proposed agreement, as it previously did, there would be little doubt Gemini Earn users would receive more than full recovery.”
Gemini Earn was originally introduced as a service by the cryptocurrency exchange Gemini, financed by Genesis. However, users of this service were subsequently affected by Genesis’ filing for bankruptcy protection and the subsequent freeze on withdrawals.
The initial bankruptcy filing by Genesis took place in January 2023, following the suspension of withdrawals triggered by a significant liquidity crisis in November 2022. It has been reported that the company owed over $3.5 billion to its primary creditors, which included Gemini.
This marks the second tentative agreement presented in the case. The previous proposal from DCG, submitted on August 29, involved offering DCG equity. However, just one day after the first proposal was put forward, Genesis lenders labeled the agreement as ‘entirely inadequate’ in an update.
The lenders argued that the debtors, along with the unsecured creditors of Genesis, appeared to be unwilling to fulfill their fiduciary responsibilities aimed at maximizing creditor recoveries. One week later, on September 6, Genesis initiated legal proceedings against its parent company, DCG, and its affiliate, DCG Investments, citing defaulted loans valued at approximately $600 million. On September 5, Genesis Global Trading announced its intention to discontinue its cryptocurrency spot trading service, effective September 18.
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