The crypto lender platform Genesis Global has reached an agreement in principle with the Digital Currency Group (DCG) over the potential sale of Genesis crypto trading and market-making arm in order to raise funds to repay creditors as per a report.
It was gathered that the DCG is set to take up equity stake in Genesis’ trading arm upon final court approval. The decision by Genesis Global was part of the restructuring efforts aimed at ensuring creditors get at least 80% of their funds.
Instructively, DCG would be mandated to contribute its share of equity in Genesis Global Trading — Genesis’ brokerage subsidiary business — to Genesis Global Holdco, the holding entity for Genesis.
The new arrangement would bring all Genesis-related entities under the same holding company.
However, it was reported that DCG will be committed to exchanging an existing $1.1 billion promissory note due in 2032 for convertible preferred stock in favour of Genesis Global.
In the same vein, the agreement will also mandate crypto exchange Gemini to contribute $100 million for its Gemini Earn users despite having frozen funds with the bankrupt firm.
In view of the foregoing, Alexey Pertsev stated that DCG and Genesis creditors should expect 80% capital return once the court validates the agreement.
UPDATE: DCG/Genesis creditors have been told to expect capital returns of 80%.
**beyond that number depends on a convertible preferred equity note and “realized liquidation prices” based on DCG/Genesis assets.
— Andrew (@AP_Abacus) February 6, 2023
Meanwhile, a user provided an update on Feb. 6 from the Genesis creditor and crypto yield platform Donut stating that the plan has a potential recovery rate of $0.80 per dollar deposited with a path to $1.00 for creditors.
In-Road for Genesis Global Survival
It is becoming clear that the restructuring plan of Genesis Global is making headway following its filing for Chapter 11 bankruptcy proceedings after suffering from a liquidity crisis in Nov.
In the course of the bankruptcy hearing in January, Genesis lawyers revealed that the firm was exploring options towards clearing creditors funds, and hoped to be out of Chapter 11 proceedings by late May.
Meanwhile, Genesis Global is yet to clear itself with the US Securities and Exchange Commission (SEC) having been indicted alongside Gemini exchange over unregistered securities.