The future of Genesis Global Capital (GGC), the defunct lender embroiled in a bankruptcy case, appears to hang in the balance, as an in-principle resolution with parent company Digital Currency Group (DCG) finds itself under scrutiny from a group of creditors.
The creditors have voiced concerns over what they perceive as ‘wholly insufficient’ treatment of over one billion dollars’ worth of outstanding loans. Their point of contention revolves around DCG’s – and hence Barry Silbert‘s – potential immersion from future obligations, something the creditors are set to strongly resist.
To add more insight to the aforementioned transactions, GGC had filed for bankruptcy earlier this year following a push and pull of ill fortune – the collapse of Three Arrows Capital and a cryptocurrency exchange platform named FTX. Subsequently, a deal between DCG and GGC, revealed on Tuesday, proposed partial repayments to reconcile liabilities of $630 million in unsecured loans by May 2023 and a further $1.1 billion by 2032.
The deal, however, didn’t sit well with everyone, particularly a collation of lenders claiming a cumulative $2.4 billion in claims against GGC. This league of lenders criticizes the DCG agreement and alleges Genesis and a formal committee representing creditors of disregarding their fiduciary duty by consenting to the DCG deal, which, they argue, undermines the potential for recovery.
The lenders’ grope is not entirely baseless. Genesis’s recent filing, which unveiled the proposed agreement, stated that the deal might help unsecured creditors recover between 70 and 90 percent of their investments. But, the creditors highlight the significant shortfall expected even if the higher end of that range is realized.
The back and forth between Genesis, DCG, and the creditors’ assembly reflects a ceaseless pendulum of claims and negotiations amidst which Genesis and DCG are yet to publicly comment.
In summary, the critical situation reflects the unpredictable twists that can emerge in the crypto world, precisely in the lending realm. Undoubtedly, the bankruptcy proceedings of Genesis Global Capital are a riveting watch for every cryptocurrency enthusiast. As the adage goes, it is not over until it’s over, and in the high-stakes world of digital currencies, truly, nothing is certain until the blockchain verifies it.