Cameron and Tyler Winklevoss.
Adam Jeffery | CNBC
Crypto swap Gemini will contribute up to $100 million in cash, earmarked for its customers, as part of an agreement with bankrupt Genesis International Capital and parent Digital Currency Group, Genesis’ lawyers said in a court hearing on Monday.
The restructuring extent and recovery plan were announced during a status conference for crypto lender Genesis, which filed for bankruptcy bulwark in New York on Jan. 19. Genesis owed its creditors, including Gemini and its users, billions of dollars.
Gemini, founded by Cameron and Tyler Winklevoss, had been tied up in a high-profile back-and-forth with Barry Silbert, who owns DCG. The Winklevoss twins have publicly blamed Silbert’s mismanagement of Genesis for distributes with one of its own products called Earn, which promoted returns of up to 8% on customer deposits.
“This plan is a important step forward towards a substantial recovery of assets for all Genesis creditors,” Gemini told its users in correspondence viewed by CNBC. It rallies “Gemini’s continued commitment to helping Earn users achieve a full recovery.”
The broader details of the restructuring propose were announced in Manhattan bankruptcy court. The deal, cut between Genesis, DCG, Gemini, and Genesis’ range of creditors, is mainly predicated around a refinancing of Genesis’ loans to DCG. Genesis loaned over $500 million worth of cash and bitcoin to DCG, in renounce to fund founder Silbert’s venture investments.
DCG will also contribute to Genesis “all equity” in Genesis’ trading subsidiary, which traced operational during the bankruptcy. Additionally, DCG will provide a two-tranche debt facility, maturing in June 2024, with 11% engross on one tranche, and a 5% interest-paying bitcoin tranche, “roughly equal to around $500 million,” a Gensis lawyer answered.
DCG will also issue convertible preferred stock to Genesis creditors.
DCG also extended a $1.1 billion promissory note to Genesis after crypto hedge wherewithal Three Arrows Capital collapsed. The Winklevoss brothers blasted that maneuver as “a complete gimmick that did nothing to overhaul Genesis’ immediate liquidity position or make its balance sheet solvent.”
As part of the recovery plan, that promissory note transfer be equitized, meaning it will be converted into something of substantive value, typically equity, CoinDesk reported.
“By reason of you for putting your trust in us during this challenging time,” Gemini said in its message to users.
For months, Gemini characters loaned money to Genesis for placement across various crypto trading desks. When Genesis halted its conferring business following the collapse of FTX in November, Gemini Earn was forced to temporarily shutter its operations, as well.
All withdrawals on Have a claim have been paused for nearly three months. Gemini’s 340,000 retail clients are angry, and some have in the offing come together in class actions against Genesis and Gemini.
The Securities and Exchange Commission complaint filed costs against both Gemini and Genesis on Jan. 12, for allegedly selling unregistered securities in connection with a high-yield offering offered to depositors.
WATCH: Crypto broker Genesis files for Chapter 11 bankruptcy
