Digital Currency Group (DCG) has put forward a fresh proposal aimed at addressing the situation of creditors of the now-bankrupt Genesis Global, a move that could potentially lead to the recovery of a significant portion of claims for unsecured creditors. The plan, outlined in a document released on September 13, envisages unsecured creditors receiving between 70% to 90% of their claims, with a substantial portion of the recovery in the form of digital currencies.
Notably, the plan also aims to facilitate the recovery of claims for users of Gemini Earn, a service offered by cryptocurrency exchange Gemini and funded by Genesis. Users of Gemini Earn were affected when Genesis filed for bankruptcy earlier this year, leading to withdrawal freezes. Under the proposed plan, Gemini Earn users could see their claims recovered at rates of approximately 95% to 110%, even without any contribution from Gemini.
The filing mentioned that if Gemini were to commit to providing $100 million to Gemini Earn users, as it has done previously, these users would receive more than a full recovery. This situation arose due to Genesis's bankruptcy filing, which followed a liquidity crisis in November 2022, leading to the suspension of withdrawals. The company reportedly owes over $3.5 billion to its major creditors, including Gemini.
This marks the second agreement-in-principle presented in this case, with DCG's previous proposal submitted on August 29 involving DCG equity. The initial proposal faced criticism from Genesis lenders, who deemed it inadequate. Genesis lenders have also claimed that both the debtors and unsecured creditors of Genesis are not fulfilling their fiduciary duties to maximize creditor recoveries. Genesis Global Trading recently announced plans to discontinue its cryptocurrency spot trading services starting September 18.
