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- 1 DGC is in talks with Capital providers for Growth Capital as Genesis Credits raise their demand.
- 2 Gemini threatens to file a lawsuit demanding $900 million from Genesis.
- 3 FTX files a motion demanding $4 billion from Genesis.
Bankrupt Crypto Firm Genesis’s parent company Digital Currency Group (DCG) has reported that there is nothing that it can do with its “outstanding intercompany obligations” that will get its creditors their money back.
DGC’s Response to Creditors’ Demand
After Genesis filed for Chapter 11 bankruptcy, the parent company proposed a settlement plan to recover up to 80% of creditors’ money. On May 9 the announcement was made by the DGC that it is currently in a 30-day meditation period with Genesis responding to its creditors’ demands.
Genesis creditors raised demand in April by reporting that it had $1 billion to $10 billion liabilities when it file for bankruptcy. This demand raise has also disrupted the bankruptcy proceedings and the “agreement in principle” between the parent company and the firm.
DGC said that in response to the creditors’ demands, it is currently trying to gain financial flexibility as it is looking to refinance its outstanding intercompany obligations and is in discussions with capital providers for growth capital. “We are committed to reaching a fair outcome for all and look forward to a productive resolution during this mediation period.”
Genesis’s extended problems
Genesis bankruptcy is not the only problem that the firm faces right now. It is also the centre of a legal battle between DCG and the crypto exchange firm Gemini. Almost $900 million is owed by Genesis to Gemini which the firm locked out of Gemini’s clients earn funds. The bankrupt fund operated this program along with Gemini. Cameron Winklevoss, co-founder of Gemini threatened to file a lawsuit against CEO Barry Silbert and his company DCG if they couldn’t offer Gemini creditors “a fair deal”.
Apart from this Genesis also got a motion against them wherein the Bahamas-based bankrupt firm FTX demanded $4 billion from Genesis which FTX lent to the firm. FTX and its sister company are fighting tooth and nail to recover its creditors’ money and Genesis happens to be one of their biggest debt owners.
Amid the financial troubles that the firms are going through, the U.S. Securities and Exchange Commission (SEC) has taken action against Gemini and Genesis in January for offering Unregistered Securities. Apart from this Gemini is also being investigated by the New York State Department of Financial Services over its earnings program.
With the proposed restructuring plan this 30-day meditation period gives Genesis and DCG until the end of May to come to a resolution. According to Genesis’s Chapter 11 bankruptcy filing, it plans to exit Bankruptcy on May 19 by selling its assets.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
