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Gemini and DCG Reach Consensus on Mediation Procedure to Establish “Conclusive Settlement” for Creditors
Gemini Earn, the digital asset lending division of the Winklevoss-owned cryptocurrency exchange, announced on Sunday that it has reached an agreement with Barry Silbert’s Digital Currency Group (DCG) to initiate a mediation process aimed at resolving their bankruptcy dispute.
The firm indicated that it anticipates an order from Bankruptcy Judge Lane to facilitate the mediation as soon as Monday.
Gemini’s Final Resolution
According to the company’s most recent update, the plan includes scheduling two meetings prior to Monday, May 8. This date holds significance as DCG is obligated to repay the bankruptcy estate $630 million by May 9 to 11.
Gemini noted that if DCG does not fulfill its repayment obligation by that deadline, the prominent crypto entity risks “defaulting on its obligations.”
“The mediation will be specifically concentrated on DCG’s financial contribution to the bankruptcy estate for the benefit of all creditors, including Earn users, and aims to resolve the Genesis bankruptcy plan,” Gemini stated.
DCG is the parent organization of Genesis Trading, the institutional crypto-lending firm that entered bankruptcy after incurring significant losses from both Three Arrows Capital in June and FTX in November. Consequently, Gemini was compelled to suspend withdrawals from its Earn product, as it relied on Genesis for generating yield for its retail clients.
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While the agreement is set for a duration of 30 days, Gemini mentioned that both parties are anticipated to “work swiftly towards a resolution in the immediate timeframe.”
“We have also conveyed our dissatisfaction on the record before Judge Lane regarding the slow pace of progress among the parties and the necessity for urgency,” the company added. “The next status conference with the Court is scheduled for May 4th.”
Recovering From the Crash
Last week, DCG claimed that a group of Genesis creditors had abandoned a prior restructuring agreement established two months earlier, which was intended to “maximize value” for all stakeholders of Genesis.
The arrangement would have involved DCG swapping its $1.1 billion note owed to Genesis in 2022 for convertible preferred stock issued by DCG. Cameron Winklevoss criticized the valuation of the previous note in January as significantly inflated and subsequently threatened legal action against Silbert.
The Winklevoss twins committed in April to invest $100 million of their own funds into Gemini, which has faced cash flow challenges since the issues with Genesis began.
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