Digital Currency Group (DCG) has defaulted on a $630 million debt payment, according to the US-based crypto exchange Gemini.
In a new blog post update, Gemini says they are working with DCG-owned crypto lender Genesis to find a resolution for Gemini Earn users to redeem their assets.
Gemini and Genesis are in mediation to find a resolution for Gemini Earn users who lost their assets when Genesis went bankrupt in January.
Earlier this month, DCG, Gemini, and Genesis entered into a 30-day mediation process to find a resolution for Gemini Earn users who lost their assets when the broker went under.
Court filings indicate that Genesis owes more than $3.8 billion to its largest 50 creditors, including Gemini.
According to new Gemini update, Gemini has been working on three points regarding the Earn program recently, the first of which being DCG’s apparent default.
“First, Digital Currency Group, Inc. (DCG), the parent company of Genesis Global Capital, LLC (Genesis) did not pay the approximately $630 million that came due last week. Genesis, the Unsecured Creditors Committee (UCC), the Ad Hoc Group of Creditors (AHG), and Gemini are considering whether to provide a forbearance to DCG to avoid a DCG default. Consideration will be based in part on whether the parties believe DCG will engage in good faith negotiations on a consensual deal.
Second, in the event a deal cannot be reached, Gemini (along with the other parties) is working with Genesis to suggest terms for an amended plan of reorganization that could be advanced without DCG’s consensual participation. To that end, on Friday (5/19), Genesis filed a motion with the Bankruptcy Court seeking to extend its period of exclusivity to propose such a plan. This would be a plan that would have Gemini’s input if not outright support.
Third, Gemini has been preparing the Gemini Master Claim, which must be filed on Monday (5/22). The Gemini Master Claims seeks the return of over $1.1 billion of digital assets that Genesis has refused to return to the 232,000 Earn users who had active loans as of January 19, 2023.”
Genesis and the exchange had collaborated to create Gemini’s Earn program, which allowed retail investors to loan out their digital assets to earn interest. Genesis owes about $765 million to members of the Earn program, the highest single amount it owes, according to the bankruptcy filings.
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