Gemini is planning to file a new motion with the court seeking the return of $1.1 billion of digital assets from DCG-owned Genesis.
Troubled cryptocurrency exchange Gemini is considering a forbearance option against the Digital Currency Group (DCG), which missed a $630 million repayment last week.
When a lender grants forbearance, the borrower can temporarily reduce its mortgage payment or temporarily stop making payments. The borrower must subsequently pay the reduced or paused payments.
In its updated response, Gemini claimed that the forbearance consideration would be partly based on whether DCG will engage in good-faith negotiations on a consensual deal. If an agreement cannot be reached among the involved parties, Gemini plans to work with DCG-owned Genesis Capital to suggest terms for an amended plan of reorganization that could be advanced without DCG’s consensual participation.
On May 19, Genesis also filed a motion with the bankruptcy court seeking to extend its period of exclusivity to propose such a plan.
The Gemini-DCG repayment saga originated after Genesis filed for Chapter 11 bankruptcy on Jan. 19. In February, Gemini co-founder Cameron Winklevoss threatened to sue DCG and its CEO Barry Silbert over a $900 million loan repayment.
5/ We have been preparing to take direct legal action against Barry, DCG, and others who share responsibility for the fraud that has caused harm to the 340,000+ Earn users and others duped by Genesis and its accomplices.— Cameron Winklevoss (@cameron) January 20, 2023
According to the court filing, Genesis owes over $3.5 billion to its top 50 creditors, including Gemini, Cumberland, Mirana, MoonAlpha Finance and VanEck’s New Finance Income Fund. The Genesis settlement process has been marred into controversy from the beginning.
Related: Gemini and Genesis’ legal troubles stand to shake up industry further
Genesis and DCG reached an “agreement in principle” with creditors, and Genesis submitted a full settlement to the bankruptcy court in February. Creditors were expected to collect 80% of the money they had lost due to the bankruptcy under the initial settlement agreement. However, Genesis creditors increased their demands a few months later, derailing the initial settlement plans.
Gemini has prepared a new “Gemini Master Claim,” which the exchange plans to file by May 22. The new master plan seeks the return of over $1.1 billion of digital assets that Genesis has failed to return to some 232,000 Gemini Earn users who had active loans as of Jan. 19, 2023.
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