DCG Creditor Pact Revealed With Plan to Sell Genesis Trading Unit as Part of Bankruptcy

Earlier Monday, CoinDesk reported that DCG and Genesis had reached an agreement with a key group of creditors.

AccessTimeIconFeb 6, 2023 at 10:02 p.m. UTC
Updated May 9, 2023 at 4:07 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Digital Currency Group (DCG) intends to sell its subsidiary Genesis' crypto trading business as well as its lending arm, which is restructuring through bankruptcy, a Genesis attorney said Monday as the company revealed a pact with creditors.

Cleary Gottlieb attorney Sean O'Neal, representing Genesis, explained the proposed settlement during the status hearing for the crypto lender, which filed for bankruptcy protection last month. Earlier Monday, CoinDesk had reported that DCG and Genesis reached an agreement with a key group of creditors. CoinDesk, like Genesis, is owned by DCG.

  • DCG Reaches In-Principle Deal With Genesis Creditors
    02:26
    DCG Reaches In-Principle Deal With Genesis Creditors
  • Crypto Custodian Prime Trust Files for Bankruptcy
    02:06
    Crypto Custodian Prime Trust Files for Bankruptcy
  • Celsius Can Start Converting Altcoins to Bitcoin, Ether as of July 1, Judge Says
    04:58
    Celsius Can Start Converting Altcoins to Bitcoin, Ether as of July 1, Judge Says
  • FTX’s Bankruptcy Fees on Track to Be 'Very Expensive', Court Examiner Says
    05:48
    FTX’s Bankruptcy Fees on Track to Be 'Very Expensive', Court Examiner Says
  • The agreement in principle was reached with two groups of ad hoc creditors, DCG and Gemini Trust Co.

    "Under the settlement, DCG would contribute that entity, [Genesis Global Trading], to [Genesis Global Holdco] ... that will happen on the effective date," O'Neal said. "In the meantime, during these cases, we will actually be marketing and trying to sell not only the debtors' assets, but also GGT's because they form a nice package, and we believe that by packaging them together, we can maximize the recoveries to the estate."

    Other aspects of the proposed deal will see a restructuring of the debt that DCG owes Genesis Holdco, one of the legal entities that filed for Chapter 11 protection. Under the new terms, DCG will issue a second lien term loan facility that will mature in June 2024.

    "There will be two tranches ... one will be denominated in U.S. dollars and pay 11.5% interest and tranche two will be denominated in bitcoin, [which will] pay a 5% interest," O'Neal said.

    DCG has also agreed to issue a class of convertible preferred stock, O'Neal said, though the finer details of this issuance are still being worked out.

    A press release published after the hearing ended said DCG would exchange its existing $1.1 billion promissory note – currently due in 2032 – for this convertible stock.

    Gemini co-founder Cameron Winklevoss tweeted about the proposed settlement during the hearing, saying Gemini will itself contribute "up to $100 million more for Earn users as part of the plan."

    Gemini partnered with Genesis to offer the Earn yield product until Nov. 16, when Genesis announced its lending business would be halting withdrawals, which then affected Gemini Earn customers' ability to access their funds.

    UPDATE (Feb. 6, 2023, 22:15 UTC): Adds additional details.

    UPDATE (Feb. 6, 22:28 UTC): Adds Gemini tweet and explains the Earn product.

    UPDATE (Feb. 6, 22:50 UTC): Adds Genesis press release.

    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

    Nikhilesh De

    Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

    Nick Baker

    Nick Baker is CoinDesk’s deputy editor-in-chief and a Loeb Award winner. His crypto holdings are below CoinDesk's $1,000 disclosure threshold.


    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.