Some creditors of bankrupt crypto lender Genesis are unsatisfied with an in-principle agreement that the firm and its parent company, Digital Currency Group (DCG) proposed earlier this week.
The plan would result in unsecured creditors recovering 70%-90% in U.S. dollars and 65%-90% in-kind based on the denomination of the digital asset of their claims. It also outlined new terms for DCG to repay its $630 million debt obligation that fell due in May 2023. At the time, many believed that creditor groups, including crypto exchange Gemini, supported the plan.
In fact, Gemini’s attorney Anson Frelinghuysen stated in court that Gemini viewed the plan as “a critical step toward undoing the harm that Gemini users have suffered over the past few months.”
However, in a court filing on Wednesday, Gemini’s attorneys argued that the proposed plan was “woefully light on specifics” and the purported 70% to 90% recoveries outlined were “completely unsubstantiated.”
Calling the in-principle agreement a dead end, the attorneys made it clear that Gemini and Genesis’ Ad Hoc Group of Lenders did not support it. The latter filed their own objection to the plan a day prior, calling DCG’s contribution to the estate “wholly insufficient.”
“On account of the $1.1 billion fraudulent promissory note that led all parties down this path in the first place, currently payable in nine years, DCG is instead paying $830 million in seven years at sub-market interest rates,” stated the Ad Hoc Group of Lenders.
Another group of Genesis’ creditors, called the Fair Deal Group, filed an objection to the plan on Wednesday, largely echoing the sentiments of Gemini and the Ad Hoc Group. The group claims that the deal squanders billions of dollars of claims against DCG, and calls the estimated 90% recoveries fiction.
“DCG has committed fraud. It defrauded Genesis’ lenders brazenly and repeatedly, causing this bankruptcy. It is widely reported to be facing multiple governmental investigations of both a civil and criminal nature,” alleged the Fair Deal Group.