With the ongoing bankruptcy proceedings of Genesis, closely watched by everyone in the cryptocurrency community, the involvement of leading exchange Gemini seemed to invite more confusion than clarity. A recently revealed proposed resolution for Genesis’s financial troubles appears to offer little assurance to its largest creditors, or so suggests the legal team representing Gemini. Their grouse is the apparent lack of substantial details accompanying the proposed resolution, a concern they articulated in a fresh filing last Wednesday.
In a similar vein, the Fair Deal Group, an assembly of ad hoc creditors, has also expressed its skepticism over the proposal, indicating that the resolution’s current form doesn’t guarantee full security for the debts Genesis owes. Further, they question Genesis’s capability to adopt a workable plan, given the indistinct ‘agreement in principle’ announced by the exchange on August 29, 2023. The fears of these parties are not misplaced given the insufficiency of economic considerations detailed in the proposal.
Genesis, a sibling company of CoinDesk under the Digital Currency Group, had declared bankruptcy earlier this year. In its late August filing, lawyers for the beleaguered financial institution indicated that the unsecured creditors may reclaim nearly 90% of the US dollar equivalent of their holdings—a claim whose accuracy is now being doubted thanks to scant specifics.
Adding to the mounting concerns, another group of creditors—the Ad Hoc Group of Genesis Lenders—put forth arguments against the role played by the Digital Currency Group (DCG). They maintained that DCG’s part is grossly inadequate to even cover the uncontested loan amounts due—an unfortunate situation that has necessitated the demand for an end to an exclusive period that allowed Genesis to mediate bankruptcy resolution terms.
What appears to augment Gemini’s predicament is the fact that DCG has allegedly defaulted on approximately $630 million in loans that became due to Genesis in May 2023—a matter awaiting redressal. While the representatives of Genesis have not yet commented on the matter, these developments underscore the need for increased transparency in the cryptoworld, not only reassuring potential investors but also establishing robust financial practices in the often tumultuous crypto markets.
Source: Coindesk
