Digital Currency Group Reaches Agreement with Creditors of Genesis Subsidiary

Digital Currency Group (DCG), a major venture capital firm in the cryptocurrency industry, has reached an in-principle agreement with creditors of its crypto lending subsidiary, Genesis.

Estimated Recovery of 70–90% for Unsecured Creditors

According to a court filing published on Aug. 29, the estimated United States dollar equivalent recoveries could amount to 70–90% for unsecured creditors, should the amended plan be approved.

Potential Recovery of 65–90% on In-kind Basis

The amended plan could result in 65% to 90% recovery on an in-kind basis, depending on the denomination of the digital asset, the filing notes.

New Debt Facilities and Partial Repayment Agreement

To satisfy its existing liabilities to debtors — including $630 million in unsecured loans due in May 2023 and $1.1 billion under an unsecured promissory note due in 2032 — DCG would also enter into new debt facilities and a partial repayment agreement. The debts include a $328.8 million first-lien facility with a two-year maturity and an $830 million second-lien facility with a seven-year maturity.

$275 Million in Installment Payments

DCG would also pay $275 million in installment payments prior to the plan effective date pursuant to the partial repayment agreement, the filing notes.

Genesis Affected by Crypto Bear Market

Genesis is one of many crypto lending firms that were affected by the massive bear market of 2022, having to file for bankruptcy in January 2023. The company owed more than $3.5 billion to its top 50 creditors, including firms like Gemini and VanEck’s New Finance Income Fund.

Withdrawals Suspended Due to Market Turmoil

As previously reported, Genesis suspended withdrawals in mid-November 2022, citing unprecedented market turmoil related to the collapse of the FTX crypto exchange. The company claimed that the event triggered an "abnormal" amount of withdrawals that exceeded its liquidity.