Major crypto conglomerate Digital Currency Group (DCG) has been embroiled in the bankruptcy proceedings of its subsidiary Genesis’s lending unit.
Over the last few weeks, many were concerned that the firm was at risk of defaulting on a debt obligation to the bankruptcy estate. On Friday, crypto exchange Gemini, who is also a Genesis creditor, confirmed in an update that DCG missed a $630 million payment that was due the week of May 9.
Genesis, Gemini and various groups representing creditors, including the Unsecured Creditor Committee (UCC) and the Ad Hoc Group of Creditors (AHG) are now considering whether to provide DCG forbearance so that the firm can avoid a default.
“Consideration will be based in part on whether the parties believe DCG will engage in good faith negotiations on a consensual deal,” said Gemini.
Earlier this month, Genesis’ creditors agreed to a request for a 30-day mediation period and a court-appointed mediator after a “subset of creditors” walked away from a reorganization plan that was finalized in February.
The UCC reportedly submitted revised terms after investigating various intercompany loans between Genesis entities and DCG made before Genesis halted withdrawals last year.
In the event that a deal cannot be reached, Gemini plans to work with Genesis on proposed terms of a new plan that could be advanced without DCG’s consensual participation. Gemini also intends to file a claim for Genesis to return $1.1 billion to 200,000 Earn users who had active loans as of Jan. 19.
