Digital Currency Group Restructures to Settle Debts of Bankrupt Genesis Unit

Digital Currency Group (DCG), the parent company of failed crypto broker Genesis Global Capital, has announced a restructuring plan aimed at raising capital to repay creditors.

In recent court filings, the company revealed that it intends to transfer equity in Genesis Global Trading to Genesis Global Holdco and eventually sell both companies to pay back creditors.

Genesis Global Capital and Genesis Global Holdco both filed for Chapter 11 bankruptcy protection from creditors last month. Despite this, the company remains optimistic about the future.

“Genesis today moved a step closer to a resolution for our lending business that maximizes value for all clients and stakeholders,” said Derar Islim, Interim CEO of Genesis Global Trading, in a statement.

Genesis Global Capital was once a lending partner of New York-based crypto exchange Gemini for its Gemini Earn program, which allowed investors to loan their crypto assets to Genesis in exchange for up to 8% interest.

However, the company had to halt customer withdrawals on this program in November 2022 following the collapse of the Bahamas-based crypto exchange FTX.

This eventually led to Genesis filing for Chapter 11 bankruptcy in January 2023, with estimated liabilities of between $1 billion and $10 billion to over 100,000 creditors.

Recently, Gemini agreed to contribute $100 million towards asset recovery for Earn users as part of an in-principal agreement with Genesis, DCG, and other stakeholders to place all entities under Genesis Global Holdco.

Genesis had been facing a liquidity crunch with a $175 million exposure to FTX on its trading account, and was looking to raise $1 billion from investors before pausing withdrawals and new loans in mid-November.