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Genesis and DCG Creditors Set to Reclaim as Much as 110% of Their Investments in Revised Compensation Plan?
Genesis, along with its parent organization, the Digital Currency Group (DCG), has introduced a compensation strategy for more than 230,000 retail creditors.
This initiative seeks to assist users of Gemini’s Earn Program and is scheduled for a vote later this year, which could enable creditors to recover between 95-110% of their claims.
Genesis Earn Users May Achieve Near Full Recovery
Genesis offered financial backing for Earn, a service accessible to clients of the Gemini cryptocurrency exchange. However, complications arose when Genesis had to halt withdrawals and seek bankruptcy protection.
Previous assurances from the legal representatives of Genesis and DCG had estimated potential recoveries at up to 90% of the U.S. dollar equivalent of unsecured creditors’ assets. Nevertheless, the latest filing presents a more favorable outlook.
An unnamed senior official from DCG mentioned in a recent discussion,
“Earn customers could potentially recover between $440 million and $765 million from the claims. The estimated distribution from this claim ranges from $400 million to $535 million. Furthermore, the Earn customers will obtain the $600+ million collateral from Gemini. The total recoveries may exceed a billion dollars, reflecting their overall claims. Essentially, this indicates a complete restitution for the current customers under the existing circumstances.”
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The claims of Earn customers are assessed based on anticipated returns from the bankruptcy estate of Genesis. Additionally, collateral from Gemini users, which includes over 30 million shares of Grayscale Bitcoin Trust (GBTC) valued at around $607 million, is also taken into account.
Compensation Plan Set for Year-End Approval
As per an agreement draft dated Aug. 29, certain repayments may be made in kind, suggesting that some cryptocurrency investors will receive payments in cryptocurrency instead of U.S. dollars.
The filing indicates that DCG intends to submit a revised version of the proposed plan by Oct. 6 and aims to secure voting results by Dec. 5, ensuring prompt distribution thereafter.
Genesis’ lending division filed for bankruptcy in January following the downfall of hedge fund Three Arrows Capital and challenges at the crypto exchange FTX. The delay in resolution was primarily due to negotiations concerning DCG’s financial involvement.
A public dispute emerged between Gemini exchange founders Cameron and Tyler Winklevoss and DCG founder Barry Silbert during this period. The recent filing also accused Gemini of failing to support their customers throughout the bankruptcy process.
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