A creditor committee for Digital Currency Group and its subsidiary Genesis have been presented with a plan to tackle their liquidity issues.
In a Wednesday update, Gemini co-founder Cameron Winklevoss said that investment banking firm Houlihan Lokey had presented a plan on behalf of DCG and Genesis’ creditor committee to recover assets.
Earn Update: Today, Houlihan Lokey presented a plan on behalf of the Creditor Committee to resolve the liquidity issues at Genesis and DCG and provide a path for the recovery of assets.
— Cameron Winklevoss (@cameron) December 20, 2022
“This plan is based on information received from Genesis, DCG, and their respective advisors to date. The Creditor Committee expects an initial response this week,” said Winklevoss.
Gemini’s Earn program has been directly impacted by Genesis’ liquidity issues, with the latter owing the crypto exchange’s users as much as $900 million, the Financial Times reported earlier this month. Gemini formed a creditor committee on Dec. 6, after freezing withdrawals from its Earn program.
Genesis and DCG’s liquidity issues are tied to the collapse of crypto exchange FTX, where Genesis’ lending arm has $175 million locked in a trading account.
A Nov. 22 Bloomberg report, citing people familiar with the matter, said Genesis was struggling to raise fresh capital, without which it would likely need to declare bankruptcy. The firm refuted these claims in a statement to TechCrunch shortly after, saying it had “no plans to file bankruptcy immenently.”
DCG CEO Barry Silbert addressed the liquidity crunch at Genesis in a letter to shareholders, explaining that the situation arose from what he called a liquidity and duration mismatch on Genesis’ loan book.
Genesis has hired investment banking firm Moelis & Company to explore its own restructuring options, but is yet to share updates on how it plans to tackle these issues.