Bankrupt crypto lender Genesis Global Holdco has unveiled its plan to repay its creditors. The proposed plan includes Digital Currency Group (DCG) transferring its equity in Genesis Global Trading to Genesis Global Holdco, which will then sell both companies and restructure a loan. The creditors will receive 100% of the equity in the reorganized Genesis Global Holdco, subject to dilution by a potential management incentive program approved by the bankruptcy court.
Earlier this week, Genesis and Gemini reached a $100 million agreement regarding the Earn program. Gemini will contribute up to $100 million more for Earn users, with Genesis being the primary partner. The settlement also includes DCG exchanging its $1.1 billion note for convertible preferred stock and refinancing its 2023 term loans in two tranches, payable to creditors with a total value of $500 million.
Genesis’s financial issues began after the collapse of crypto hedge fund Three Arrows Capital, which Genesis had exposure to. Following the collapse of FTX, Genesis stopped withdrawals in November 2022, leading users and the Winklevoss twins to threaten legal action against the company and DCG founder Barry Silbert for failing to offer a repayment plan for the $900 million loan Gemini made to the now-insolvent Genesis Global.
In January, the crypto brokerage firm filed for Chapter 11 bankruptcy, citing significant exposure to Three Arrows Capital and FTX as the reasons. At the time, Genesis had approximately $175 million in exposure to FTX and attempted to raise a $1 billion loan from investors to avoid a liquidity crunch caused by the FTX fallout.