Key Takeaways
- The deal includes refinancing a $100 million loan in BTC and a $500 million loan in cash that DCG borrowed from Genesis.
- Winklevoss’s Gemini to contribute up to $100 million more for Earn users.
- DCG to contribute its share of equity in Genesis Global Trading — Genesis’ brokerage subsidiary business — to Genesis Global Holdco
Bankrupt crypto lender Genesis’s parent company Digital Currency Group plans to sell its subsidiary Genesis’ crypto trading business and its lending arm as part of a restructuring plan to repay creditors. The deal also includes refinancing a $100 million loan in Bitcoin and a $500 million loan in cash that DCG borrowed from the struggling crypto brokerage.
Genesis had loaned more than $500 million worth of cash and bitcoin to DCG, in part to fund founder Silbert’s venture investments. As part of the agreement, Winklevoss’s Gemini will also contribute up to $100 million more for Earn users. This comes as a major relief to Gemini earn users who have not been able to withdraw their crypto assets ever since Genesis halted withdrawals in November 2022.
Under the deal, DCG would contribute its share of equity in Genesis Global Trading — Genesis’ brokerage subsidiary business — to Genesis Global Holdco, the holding entity for Genesis bringing all Genesis-tied firms under one company.
Making the announcement, Genesis attorney Sean O’Neal stated, “Under the settlement, DCG would contribute that entity, [Genesis Global Trading], to [Genesis Global Holdco] … that will happen on the effective date,” he 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,” Neal added.
According to the lawyer, DCG will also provide a two-tranche debt facility, maturing in June 2024, with 11% interest on one tranche and a 5% interest-paying bitcoin tranche, “roughly amounting to $500 million,” DCG has also agreed to issue a class of convertible preferred stock. A press release noted that DCG would exchange its existing $1.1 billion promissory note – due in 2032 – for this convertible stock.
Earlier this year, Genesis Global Holdco and two of its lending business subsidiaries, Genesis Global Capital and Genesis Asia Pacific, filed for bankruptcy, stating it had $150 million in cash, which it plans to use as liquidity to support its ongoing operations and facilitate its restructuring process.
