Bankrupt crypto lender Genesis seeks mediator as DCG deal hits impasse

BANKRUPT crypto lender Genesis Global Holdco asked the judge overseeing its reorganisation to appoint a mediator in order to save the outline of a deal with its parent, Digital Currency Group.

Genesis is seeking mediation to take place over a two-day period prior to May 9, and ahead of a mid-May due date on US$630 million of debt owed to Genesis by DCG.

“While these discussions were initially focused on resolving issues left open in the restructuring term sheet, more recent discussions have made it clear that a mediator is necessary to assist the mediation parties in reaching a resolution,” Genesis said in a bankruptcy filing.

For its part, DCG in a tweeted statement said that “a subset of creditors have decided to walk away” from a settlement agreement that was submitted to the court. “DCG remains committed to reaching a fair outcome and while we look forward to a constructive mediation process, we will have to weigh any new demands against the concessions we’ve previously made.”

“Given that DCG owes GGC approximately US$630 million pursuant to certain fixed term loans due during the second week of May ... the Debtors believe that the mediation should be scheduled immediately,” the filing said.

Genesis Global Holdco’s lawyers submitted a term sheet in February outlining a settlement with creditors that suggests DCG would shoulder a major burden in the bankrupt crypto lender’s restructuring. The arrangement had initially been supported by creditors representing more than US$2 billion of claims against Genesis, including Gemini Trust.

The proposal called for DCG to restructure some US$1.7 billion of debt and other obligations owed to Genesis – including a US$1.1 billion promissory note assumed by DCG – by issuing new loans and stock to Genesis creditors. It would have also seen DCG forfeit its ownership in Genesis Global Trading, its non-bankrupt crypto brokerage.

Genesis is among firms that were swept away by last year’s bear market in cryptocurrencies, along with lending rivals like Celsius Network and Vault. When crypto exchange FTX filed for bankruptcy in November, Genesis was destabilised by a wave of redemption requests and was forced to halt withdrawals at the lending division.

A Gemini spokesperson didn’t immediately respond to a request for comment. BLOOMBERG