Genesis Bankruptcy Restructuring Advances with DCG’s Plan to Sell Trading Division
Digital Currency Group (DCG) and Genesis have reached an agreement with creditors to restructure their crypto trading and lending businesses through bankruptcy.
The proposed settlement includes the sale of Genesis' trading unit, the restructuring of debt owed by DCG, and the issuance of convertible preferred stock
Digital Currency Group (DCG) and its subsidiary Genesis have reached an agreement with a key group of creditors over the restructuring of its crypto trading business and lending arm, which filed for bankruptcy protection last month. Genesis Global Trading will be contributed to Genesis Global Holdco on the effective date, with both entities being marketed and sold as a package to maximize recoveries to the estate.
The debt owed by DCG to Genesis Holdco will also be restructured under the new terms, with DCG issuing a second lien-term loan facility due in June 2024. The loan will come in two tranches, with one being denominated in US dollars and paying 11.5% interest and the other in bitcoin, paying 5% interest.
DCG has also agreed to issue a class of convertible preferred stock, details of which are still being worked out. The company will exchange its existing $1.1 billion promissory note, which is currently due in 2032, for this convertible stock.
Meanwhile, Gemini Trust Co. co-founder Cameron Winklevoss announced that the company will contribute “up to $100 million more for Earn users as part of the plan.” Gemini had partnered with Genesis to offer the Earn yield product until November 16, when Genesis announced it was halting its lending business and affecting Gemini Earn customers’ access to their funds.
The agreement in principle was reached with two groups of ad hoc creditors, including Gemini Trust Co. and DCG. The restructuring and sale of the crypto trading business and lending arm of Genesis are expected to help the company maximize recoveries and provide stability to its customers and partners.
The finer details of the agreement are still being worked out, but the restructuring is expected to provide a much-needed boost to the crypto lending industry, which has been facing challenges due to the volatility of the crypto market.