The Digital Currency Group (DCG) failed to make a $630 million refund to the beleaguered Gemini exchange last week. Because of this, Gemini is considering taking legal action.
Granting payment deferral
It seems that Gemini wants to offer help, namely by extending them. When a lender grants a deferment, the borrower is given the option of temporarily reducing or even temporarily stopping the mortgage payment. The borrower must then pay the reduced or paused payments at a later time.
In the recent updated statement Gemini stated that consideration for forbearance depends in part on DCG’s willingness to negotiate a consensual deal. If an agreement cannot be reached between the parties involved, Gemini intends to work with DCG-owned Genesis Capital to propose terms for a modified reorganization plan that can be filed without DCG’s consensual participation.
Problems after filing for chapter 11 bankruptcy
On May 19, Genesis also served a request filed with the bankruptcy court to extend the exclusivity period so that they could propose such a plan.
The entire repayment saga between Gemini and DCG began after Genesis filed for Chapter 11 bankruptcy on Jan. 19. In February, Gemini co-founder Cameron Winklevoss threatened to sue DCG and CEO Barry Silbert for failing to repay a $900 million loan.
The lawsuit reveals that Genesis owes more than $3.5 billion to its top 50 creditors, including Gemini, Cumberland, Mirana, MoonAlpha Finance and VanEck’s New Finance Income Fund. The Genesis settlement process has been beset by controversy from the start.
Agreement in principle reached earlier
Genesis and DCG reached an “agreement in principle” with creditors, and in February Genesis filed a full settlement with bankruptcy court. Under the original settlement agreement, creditors were expected to receive 80% of the money they lost as a result of the bankruptcy. However, several months later, Genesis’ creditors increased their demands, disrupting the original settlement plans.
Finally, Gemini has drawn up a new “Gemini Master Claim”, which the crypto exchange wanted to submit before May 22. The new master plan aims to recover more than $1.1 billion in digital assets that Genesis has not returned to approximately 232,000 active users of Gemini Earn loans since January 19, 2023.