Gemini Criticizes DCG and Genesis’ Bankruptcy Plan, Calling It ‘Misleading at Best’
Crypto exchange Gemini has criticized a bankruptcy restructuring plan related to Genesis, Gemini’s partner in a lending program that has been frozen for months, saying the potential deal was “misleading at best,” according to a court filing Friday.
Earlier this week, Genesis and its parent company, Digital Currency Group, said more than 230,000 retail lenders who used Gemini’s Earn program would receive “near “complete”. Earn was offered to customers of the crypto exchange Gemini, but Genesis provided the financial infrastructure that ran the program.
But Gemini said on Friday that Gemini Earn users will not receive “close to [to the] the actual value” of the money they are owed under the proposal.
“DCG is touting proposed recovery rates that are a complete mirage – misleading at best and deceptive at worst,” Gemini’s lawyers said in the filing. “Make no mistake: Gemini Lenders will not actually receive anything under the current ‘agreement in principle’ that, in real terms, comes close to the proposed repayment rates.”
DCG owes struggling crypto lender Genesis more than $1.65 billion -dollars, which, in turn, owes Gemini about $1.2 billion. Genesis owes its top 50 creditors a total of over $3 billion.
This money would be paid out in two tranches and over seven years under DCG’s proposed repayment plan, eventually making Gemini Earn users “close to whole,” according to DCG’s lawyers.
However, Gemini’s lawyers disputed this claim, claiming that DCG’s proposal would allow the company to pay “par” repayments through “insufficient” below-market loans.
“Receiving a fraction of the interest and principal payments over seven years from an incredibly risky counterparty… is not remotely equivalent to receiving the actual cash and digital assets that Genesis owes to Gemini lenders today.” Gemini’s lawyers said in the filing.
They added: ”DCG’s [proposal] has clear parallels with… an attempt to meet its significant obligations through the issuance of ‘IOUs’ rather than paying real cash and digital assets.”
Furthermore, they complained The lawyers commented more generally on DCG’s efforts to “wear down” Genesis’ creditors “in the hope that they [would] will become desperate enough to accept a significant haircut just to move on.”
Gemini and DCG have been arguing for months over Genesis’ debt to Gemini. Those public spats culminated in Gemini suing DCG and its CEO in July, a day after DCG missed a deadline to reach a restructuring agreement for its troubled lending division.
