Genesis Parent Company Digital Currency Group (DCG) Guilty of Loan Default in Ongoing Bankruptcy Proceedings
Introduction: The ongoing Genesis bankruptcy lawsuit
At the end of last year, Genesis, a crypto company added to the long list of failed crypto ventures, launched itself into endless litigation as duped companies fought to recoup their investments. Unfortunately, the lawsuit is far from over. In a recent update provided by the crypto exchange Gemini about its Earn service, it was found that Genesis parent company Digital Currency Group (DCG) is guilty of payment default.
Genesis Parent Company Does Not Pay Loan
Gemini’s Earn service enabled users to earn additional crypto staking returns on their coins, which required Gemini to transfer tokens to Genesis. When Genesis subsequently went bankrupt, Gemini held on to a portion of the coins but threatened to lose the rest. In an attempt to reimburse users for the tokens that Genesis still lacks, Genesis requested $630 million in financial support from DCG, which was supposed to have been paid off by May 11. However, DCG failed to do so and is even considering not paying at all. As a result, Gemini has accused DCG of defaulting on its payments.
The willingness to wait
Notwithstanding the default, Gemini has expressed its willingness to wait patiently while the issue is being resolved. Last Friday, Genesis filed a request for a postponement of the reorganization plan, and Gemini has indicated that they are willing to cooperate or even fully approve the plan.
The Gemini Master claim
Gemini will file the “Gemini Master Claim” on Monday to reclaim more than $1.1 billion in Genesis assets for its clients, with over 232,000 Gemini customers still outstanding. This is in addition to the $575 million that Gemini is hoping to get back from another source.
Genesis Bankruptcy Proceedings Are Taking Longer Than Expected
Although Chapter 11 bankruptcy proceedings typically take a long time, it is now dragging on longer than originally expected. Genesis initially hoped that the problems would be fully resolved by May, with a repayment of approximately 70%, which not all creditors agreed to. Since then, the target has been set at 80 to 100%, and a mediator has been engaged to work out the final details.
The Bottom Line
Genesis’ bankruptcy and the subsequent lawsuit have affected many crypto companies, and the lawsuits continue to drag on. Gemini is one of the companies severely affected by Genesis’ default on its payments, which has led to significant losses. It remains to be seen how long the bankruptcy proceedings will take and how much Genesis will eventually be able to pay out to its creditors.