Gemini Disputes DCG and Genesis Bankruptcy Proposal, Denouncing it as 'Misleading at Best'

Police & Regulations
Sep 16, 2023 at 02:56 pm

Gemini, a prominent cryptocurrency exchange, has vehemently opposed a proposed recovery plan related to Genesis, their partner in a stalled lending initiative. In a recent court filing, Gemini expressed serious reservations about the potential agreement, deeming it "misleading at best." Earlier this week, Genesis and its parent company, Digital Currency Group (DCG), unveiled a compensation arrangement that could potentially make nearly a quarter of a million retail creditors, who participated in Gemini's Earn program, "almost whole." Nonetheless, Gemini contends that users of Gemini Earn will fall far short of recovering the actual value of their owed funds through this proposition.

Gemini's legal representatives affirmed, "DCG is promoting projected recovery rates that are entirely illusory – at best misleading, and at worst, deceitful." They underscored that the real recovery rates under the current 'tentative agreement' would be significantly lower than what is being portrayed.

DCG is indebted to the beleaguered crypto lender Genesis for more than $1.65 billion, which, in turn, owes approximately $1.2 billion to Gemini. Genesis is in debt to its top 50 creditors for a combined total exceeding $3 billion. DCG's proposed repayment plan spans two phases over seven years, with the ultimate goal of making Gemini Earn users whole. However, Gemini's legal team opposes this, contending that DCG's proposal would lead to subpar recoveries through below-market loans.

Receiving a fractional portion of interest and principal payments over seven years from a highly risky counterparty is incomparable to receiving the actual cash and digital assets that Genesis owes to Gemini Lenders today, argued Gemini's legal team. They further asserted, "DCG's proposition is akin to attempting to meet its substantial obligations through the issuance of 'I.O.U.s' rather than making genuine cash and digital asset payments."

Moreover, Gemini's legal representatives raised broader concerns about DCG's tactics to weaken Genesis' creditors with the hope that they would accept significant losses to expedite the process. The disagreement between Gemini and DCG has persisted for months regarding Genesis' debts to Gemini. This public dispute reached its climax in July when Gemini initiated legal proceedings against DCG and its CEO, following DCG's failure to meet the deadline for finalizing a restructuring deal for its struggling lending division.

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