Lenders of Bankrupt Cryptocurrency Lender Genesis Not Satisfied with In-Principle Settlement Agreement

The lenders of the bankrupt cryptocurrency lender Genesis are expressing their dissatisfaction with the latest in-principle settlement agreement. The lenders, represented by lawyers Brian Rosen and Jordan Sazant, responded to a public bankruptcy plan update, calling the agreement "wholly insufficient."

Agreement in Principle

The update stated that the Digital Currency Group (DCG) had reached an agreement in principle with Genesis' unsecured creditors (UCC) and debtors, proposing recoveries of 70%-90% of the USD equivalent. However, the Ad Hoc Group and the Gemini exchange did not support the agreement in principle described in the plan update.

Continuing Discussions

Despite the lack of support, the update mentioned that constructive discussions were ongoing with the Ad Hoc Group and Gemini regarding the agreed-upon deal in principle.

Wholly Insufficient

In response, the Ad Hoc Group stressed that it does not support the proposed agreement, arguing that DCG's contribution is inadequate to satisfy the loan amounts. The lenders claimed that the debtors and UCC are neglecting their fiduciary obligations to maximize creditor recoveries and are instead trying to move on from the situation.

The Genesis lenders also asserted that DCG should not be entitled to non-consensual third party releases, which would release non-debtor parties from liability without the consent of all potential claimholders.

The Ad Hoc Group argued that the debtors and UCC are attempting to improperly cause the release of third party claims against DCG and its related parties.

Insufficient Contributions

The lenders expressed their dissatisfaction with the contributions DCG would be making. They stated that instead of receiving the $630 million that was due three months ago, DCG would only be paying $275 million now and another $328.8 million in two years. The lenders argue that these contributions do not merit releases from estate claims or third-party creditor claims.

Bankruptcy and Crisis

Genesis is one of several cryptocurrency lending firms that were greatly affected by the cryptocurrency winter of 2022. The lender filed for bankruptcy in January 2023 after facing a liquidity crisis in mid-November 2022. The firm reportedly owed over $3.5 billion to its top 50 creditors, including Gemini.