DCG to Pay Genesis Creditors $1.1 Billion
Digital Currency Group (DCG) has reached a preliminary agreement with Genesis creditors, marking a significant moment for the cryptocurrency industry's financial landscape.
This development comes as Genesis faced financial turmoil, ceasing withdrawals due to the collapse of FTX and subsequently seeking bankruptcy protection. The agreement addresses complex legal concerns surrounding Genesis’ financial state.
Under this groundbreaking agreement, DCG’s proposed repayment plan offers a wide range of options. Unsecured creditors could potentially recover 70% to 90% of their claims in USD equivalents. Recovery percentages for non-monetary assets vary from 65% to 90%, subject to asset type and market conditions.
It’s very important to emphasize that these estimates are contingent on market dynamics and the final agreement terms. DCG’s urgency in resolving these complex claims was heightened by impending financial liabilities: approximately $630 million in unsecured loans maturing by May 2023 and an outstanding $1.1 billion under an unsecured promissory note due in 2032.
To efficiently meet these obligations, the repayment structure divides the $1.1 billion into two tranches: a $328.8 million payment maturing in two years and an $830 million portion with a seven-year maturity. Additionally, DCG will make four payments totaling $275 million to settle the May 2023 maturities.
Genesis Global Holdco and its subsidiaries initiated bankruptcy proceedings, revealing a staggering $3.5 billion debt to their top 50 creditors. These creditors include notable entities like Gemini, Cumberland, Mirana, MoonAlpha Finance, and VanEck’s New Finance Income Fund.
Beyond benefiting DCG and Genesis, this accord has the potential to stabilize the volatile cryptocurrency market. The outcome of this case holds implications for digital asset regulation and recovery, potentially setting new industry standards. This case remains captivating due to its potential precedent-setting nature.