Crypto exchange Gemini has called Digital Currency Group’s (DCG) proposed remuneration plan, as part of its subsidiary company Genesis Global’s bankruptcy case, “inadequate” in a Sep. 15 filing.
DCG proposed a plan earlier this week that said unsecured creditors would have a recovery rate of between 70% and 90% of their assets under the new plan, while Gemini Earn users could get back all of their assets with a recovery rate estimated at between 95% to 110%.
As part of the proposal, the crypto investment firm took shots at Gemini, highlighting that it failed to contribute $100 million in cash towards the restructuring proposal it had previously promised. Now Gemini is firing shots back, calling the recovery rates a “total mirage.”
“DCG continues its campaign of contrived, misleading, and inaccurate assertions in an attempt to gaslight creditors of the Genesis estate and the Gemini Lenders specifically, and escape responsibility for the harm it has caused them,” said the company’s lawyers in the filing.
Genesis Global filed for bankruptcy at the start of this year. Its main creditor is crypto exchange Gemini, which used the lender for its earn program known as Gemini Earn. There’s been a contentious battle between the two companies, with the co-founders of Gemini, Tyler Winklevoss and Cameron Winklevoss, accusing DCG founder Barry Silbert and Genesis of misleading investors in a July lawsuit. Reuters recently reported that US authorities are probing Tyler and Cameron over the claims they made. The U.S. Securities and Exchange Commission (SEC) also charged both firms with the sale of unregistered securities.
“The DCG Statement must be seen for what it is: DCG’s attempt to bait the Gemini Lenders into accepting a deal that would allow DCG to pay far less than it owes,” said Gemini in the filing.
The exchange’s lawyers highlighted that the opposition from itself, as well as the Ad Hoc Group and the Fair Deal Group, a group of Genesis creditors, demonstrates the inadequacy of the deal.
The proposed plan from DCG outlined that Gemini Earn users could be made whole based on the returns from the Genesis bankruptcy estate and 30 million shares of the Grayscale Bitcoin Trust (GBTC), which was provided as collateral from Genesis to Gemini. The GBTC shares are worth approximately $607 million, according to the plan.
Gemini continues to take issue with the write-down of a $1.1 billion promissory note, which is replaced with an $830 million loan that is payable over seven years at a 6% interest rate without any known protections as well as DCG’s plan for paying back the $630 million loan it borrowed from its subsidiary company, which came due in May.
“Paying $604 million over two years is not the value equivalent of paying what it was obligated to pay four months ago,” said Gemini’s lawyers in the filing.
Gemini and the creditor groups previously objected to an “in-principle” deal in August.
DCG declined to comment on Gemini’s response.