The parent business of crypto firm Genesis Capital, Digital Currency Group (DCG), has revealed it has no solution to its “outstanding intercompany obligations” that could help reimburse creditors.
In response to creditor demands, DCG said it was in the middle of a 30-day mediation phase with Genesis. In February, the firm offered a settlement proposal in which Genesis creditors were projected to obtain an 80% recovery of funds after the firm filed for Chapter 11 bankruptcy.
“DCG continues to be engaged with the various stakeholders in the Genesis Capital restructuring process pursuant to the 30-day mediation period entered into by all parties on May 1,” the firm said in a statement.
However, Genesis creditors increased their demands in April, interrupting the bankruptcy procedures and the “agreement in principle” between the two corporations. When it filed for bankruptcy, Genesis stated that its liabilities were between $1 billion and $10 billion.
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“On a parallel path and to provide further financial flexibility, DCG is in discussions with capital providers for growth capital and to refinance its outstanding intercompany obligations with Genesis,” DCG added. “We are committed to reaching a fair outcome for all and look forward to a productive resolution during this mediation period.”
Following Genesis’ bankruptcy, the problematic crypto company has frequently been at the heart of legal disputes between DCG and cryptocurrency exchange Gemini. DCG and Genesis apparently owed approximately $900 million to Gemini’s clients who had their Earn funds frozen – Genesis operated the scheme in collaboration with Gemini. In January, Gemini co-founder Cameron Winklevoss threatened to sue DCG and CEO Barry Silbert if they did not grant Gemini creditors “a fair deal.”
In response to the enterprises’ financial difficulties, US authorities have also taken action. Genesis and Gemini were charged with marketing unregistered securities by the Securities and Exchange Commission in January, and the New York State Department of Financial Services was also apparently investigating Gemini for its Earn program.
The 30-day period of reflection gives DCG and Genesis until the end of May to reach an agreement on the proposed restructuring plan. Genesis stated in its original Chapter 11 filing that it intended to sell its assets at auction and exit bankruptcy on May 19.
Information for this briefing was found via Coin Telegraph and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
