Gemini reached an agreement in principle with Genesis Global Capital, LLC (Genesis), DCGco, and other creditors. As part of the deal, Gemini will contribute up to USD 100 million for Earn users, but the deal with DCG also includes the sale of Genesis Global Trading according to decrypt.co.
DCG also plans to exchange its existing USD 1.1 billion note due in 2032 for convertible preferred stock, and it will also refinance its existing 2023 term loans in two tranches made payable to creditors with a total value of about USD 500 million.
Gemini and Genesis have been fighting over the Gemini Earn program, which allowed users to deposit their cryptocurrencies and receive yields of between 0.45% and 8% interest. The service’s main partner was Genesis.
Genesis was founded in 2013 and launched its lending business in March 2018. Even though it recorded considerable success in the following years, the issues with the crypto market and the fact that Three Arrows Capital defaulted on USD 1.2 billion borrowed from Genesis eventually led to a bankruptcy filing.
On 19 January 2023, Genesis has filed for Chapter 11 bankruptcy protection in New York. Genesis was yet another company in the cryptocurrency industry to file for bankruptcy in the wake of the high-profile FTX bankruptcy filing in November 2022. The filings submitted by the company estimate that it has between USD 1 billion and USD 10 billion in assets and between USD 1 billion and USD 10 billion in liabilities.
In the same month, the Securities and Exchange Commission charged Genesis Global Capital and Gemini Trust Company for the unregistered offer and sale of securities to retail investors through the Gemini Earn crypto asset lending programme. According to the SEC, Genesis and Gemini used the programme to raise billions of dollars’ worth of crypto assets from hundreds of thousands of investors.
A year earlier in August 2022, Genesis laid off 20% of its staff in an effort to reorganise itself. A few months after that, the company suspended loan redemptions and originations following abnormal withdrawal requests and market dislocation in the context of the FTX debacle. This is what caused crypto exchange Gemini to also shutter its Earn program.
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