The future of digital asset lender Genesis hangs in the balance, with Cameron Winklevoss, co-founder of Gemini, unveiling a compelling offer in the company’s bankruptcy restructuring process. Winklevoss’ proposition, addressed to Barry Silbert, founder of Digital Currency Group (DCG), includes a whopping $1.5 billion in forbearance payments and fresh loans.
The comprehensive plan comprises a $275 million forbearance payment, a $355 million debt tranche due in two years, and an $835 million debt tranche due within five years. While DCG gets to retain proceeds from Genesis Global Trading’s sale under this proposal, other Genesis company disposals would result in creditors receiving funds.
But here’s the twist. Genesis’ bankruptcy has had a profound impact on Gemini customers, with an estimated $900 million stuck in the Earn program. The Earn scheme was an initiative where customers loaned their crypto assets to Genesis. In return, Genesis invested these cryptocurrencies and dispensed interest to the investors. A dramatic halt on withdrawals was initiated following the FTX exchange’s malfunction, triggering anxiety amongst users.
With a whopping $175 million securely locked on Genesis’ FTX trading account, the company failed in its attempt to raise $1 billion from investors. Ultimately, the company resorted to filing for Chapter 11 bankruptcy protection.
Among the myriad of uncertainties encompassing the situation, Genesis’ persistent struggle to seal the deal with its creditors hangs eerily in the air. This has escalated into prolonged delays, with creditors applying additional pressure to get matters resolved promptly. Moreover, the crease deepens with the Securities and Exchange Commission mounting a lawsuit against the company over its customer lending venture — Earn.
Despite these challenges, Genesis has been granted an extension until August 2023 to file a resolution plan, conditional to its continued collaboration with its Official Committee of Unsecured Creditors. Should the discussions hit a wall, the Committee reserves the right to seek a motion for the termination of the extended filing period with just seven days’ notice. As the clock ticks, all involved parties will be keenly watching to see whether Genesis’ restructuring leads to the firm re-emerging stronger, or whether it succumbs to the weight of its existing obligations.
Source: Cryptonews
