Gemini exchange is still exploring new initiatives to help recover the funds locked on Genesis, the subsidiary of the Digital Currency Group (DCG) whose lending business went bankrupt earlier this year. In its latest update, Gemini revealed that Genesis has defaulted in its scheduled repayment of the agreed $630 million that was due last week.
Recall that Genesis went bankrupt after locking withdrawals and depriving Gemini Earn customers access to their funds. Gemini tapped the platform as its trusted custodian for the Earn product prior to its bankruptcy.
Three key ways forward for Gemini
With the default, Gemini is now looking at other alternative plans to ensure it fights for the best interests of its customers following the huge funds it is owed by Genesis. In the update, the crypto trading platform said it is considering whether to provide a forbearance to DCG to avoid a DCG default in consultation with the Unsecured Creditors Committee (UCC) and the Ad Hoc Group of Creditors (AHG).
For this forbearance to take proper hold, Gemini said the negotiations will be based solely on whether or not Genesis and DCG engage in good negotiations for a mutually-agreed-upon deal.
Additionally, Gemini said it will be exploring a move for an amended plan of reorganization should the forbearance deal fail. To make room for this, Gemini said it has "filed a motion with the Bankruptcy Court seeking to extend its period of exclusivity to propose such a plan."
The crypto exchange also said it is working on its Gemini Master Plan, which will seek to compel Genesis to refund more than 232,000 of its users who had an active loan profile as of Jan. 19, 2023, in the sum of $1.1 billion.
Playing the part
Following the update from Gemini exchange, a Genesis representative revealed in an emailed statement that key stakeholders within the firm are working with the trading platform to arrive at a promising solution.
The statement reads, "Genesis and its creditors, represented by the Official Committee of Unsecured Creditors, the Ad Hoc Group of Genesis Lenders, and Gemini Trust, are working collaboratively to address Digital Currency Group’s nonpayment of approximately $627 million in dollars and BTC that was due last week during the ongoing mediation period," adding that "Among other things, as part of the ongoing mediation process, the parties are discussing potential terms of forbearance, a standalone chapter 11 plan for Genesis and other options to recover assets and maximize value to stakeholders."
Despite the huge efforts being made by all the parties, the timeline for which the current issues will be resolved remains largely unclear.
Yuri Molchan
Denys Serhiichuk
Tomiwabold Olajide