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

Digital Currency Group (DCG) announced a deal with creditors on Monday and plans to sell its crypto trading and lending subsidiary Genesis.

During the status hearing for the crypto lender, which filed for bankruptcy protection last month, attorney Sean O’Neal, as a representative of Genesis, laid out the proposed settlement. A significant group of creditors and DCG and Genesis came to an arrangement.

Agreements were reached with DCG and Gemini Trust Co., two ad hoc creditor organisations.

O’Neal stated that on the effective date, DCG would contribute that entity to Global Holdco according to the settlement. Because they make an excellent package and bundle them together, it is possible to maximise the recoveries to the estate. In the interim, the firm will be marketing and seeking to sell not just the debtors’ assets but also GGTs.

The debt that DCG owes Genesis Holdco, one of the companies that applied for Chapter 11 protection, will be restructured as part of the proposed agreement. Following the modified terms, DCG will issue a second lien term loan facility with a June 2024 maturity date.

“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.

Although the specifics of this issuance are still being worked out, O’Neal stated that DCG has also agreed to issue a class of convertible preferred shares. After the hearing, DCG announced that it would trade its existing $1.1 billion promissory note, due in 2032, for this convertible stock.

Cameron Winklevoss, the co-founder of Gemini, tweeted during the hearing about the proposed settlement, stating that Gemini will personally give up to $100 million extra for Earn members as part of the deal.

Until November 16, when Genesis said it would stop withdrawals from its loan company, Gemini and Genesis worked together to offer the Earn yield product. As a result, users of Gemini Earn could not access their money.