Genesis parent company Digital Currency Group (DCG) and its CEO Barry Silbert have filed a motion asking the court to dismiss the lawsuit arising from the debt the crypto exchange Gemini says is owed to users of their Earn program. Gemini Earn enabled customers to loan their crypto assets to institutional borrowers to earn interest, […]
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FTX and Genesis lawyers have sent a letter to the bankruptcy judge regarding a settlement agreement.
Bankrupt crypto exchange FTX and crypto lender Genesis have reached an agreement in principle to resolve the claims brought by FTX in its bankruptcy case.
On July 27, legal counsels for both firms sent a letter to bankruptcy Judge Sean Lane stating that they had agreed to a settlement.
However, the agreement was in principle and did not provide any details on the settlement.
Both firms are bankrupt and have been trying to collect money for creditors while under court supervision.
The settlement would resolve FTX’s claims against Genesis debtors and vice versa. It would also withdraw pending motions related to those claims. Both parties intend to document and seek court approval of the settlement promptly, it stated.
“The Parties have reached an agreement in principle, subject to documentation, regarding a settlement that would resolve, among other things, the claims asserted by the FTX Debtors against the Debtors in these Chapter 11 Cases and the claims asserted by the Genesis Debtors against the FTX Debtors in the FTX Chapter 11 Cases.”
To allow time to finalize terms, they requested the court adjourn upcoming deadlines on current motions and due briefs.
FTX has previously claimed that Genesis, which is owned by Digital Currency Group, owed the bankrupt exchange as much as $4 billion. However, it reduced the amount to $2 billion, according to a letter sent to Judge Lane earlier this month.
Related: FTX debtors object to Genesis’ ‘critical’ claims estimate of ‘$0.00’
Genesis filed for Chapter 11 bankruptcy protection in a New York bankruptcy court in January following the collapse of crypto hedge fund Three Arrows Capital.
The crypto lender is the largest unsecured creditor of FTX and its affiliates with $226 million owed, according to court filings.
In June, FTX debtors objected to Genesis' estimation that it was entitled to claims totaling zero, however, these claims and objections appear to have been settled with this latest development.
Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.
Magazine: Get your money back: The weird world of crypto litigation
Crypto exchange Gemini is suing the parent company of bankrupt crypto broker Genesis over the Gemini Earn program, claiming that top executives of the lender mislead creditors. According to a new report from Reuters, the US-based exchange is suing Digital Currency Group (DCG). Additionally, in a lengthy thread, Gemini co-founder Cameron Winklevoss says that the […]
The post US-Based Crypto Exchange Gemini Sues Genesis Parent Company DCG Over Gemini Earn Dispute appeared first on The Daily Hodl.
In an open letter, Cameron Winklevoss slammed DCG's Barry Silbert for allegedly playing the victim card while owing $1.2 billion to Gemini’s 232,000 Earn customers.
Crypto exchange Gemini founder and CEO Cameron Winklevoss is again threatening to sue Digital Currency Group and its CEO Barry Silbert over delays in the resolution of Genesis for its Earn customers while slamming the CEOfor allegedly trying to play the victim card.
In the July 3 “Open Letter to Barry Silbert,” Winklevoss alleged the DCG enterprise had engaged in “fraudulent behavior” via a “culture of lies and deceit” — which have come at the expense of Gemini’s 232,000 Earn users.
Earn Update: An Open Letter to @BarrySilbert pic.twitter.com/ErsYpcEjQD
— Cameron Winklevoss (@cameron) July 4, 2023
Among the accusations, Winklevoss’ strongly-worded letter alleges that Silbert intentionally delayed resolution through “abuse” of the mediation process, stating:
"Mediation has given DCG an indefinite forbearance on the $630 million it owes Genesis — for free."
Most disturbing, according to Winklevoss, has been Silbert’s apparent claim of being the “victim” in the debacle.
“It takes a special kind of person to owe $3.3 billion dollars to hundreds of thousands of people and believe, or at least pretend to believe that they are some kind of victim," said Winklevoss, adding:
Not even Sam Bankman-Fried was capable of such delusion.”
DCG’s Genesis was the lender behind Gemini Exchange's Earn program, a product that promised returns as high as 8% to depositors. However, on November 16, Genesis announced it temporarily suspended withdrawals citing “unprecedented market turmoil.” Genesis later filed for bankruptcy on January 19.
Genesis later filed for bankruptcy on January 19, with Gemini seeking to recover its share of the billions owed by Genesis to creditors since.
However, after what Winklevoss has described as multiple delays, he appears to have had enough.
“I write to inform you that your games are over,” Winklevoss said, explaining that professional fees have now “ballooned” to over $100 million at the expense of credits and Earn users. “Enough is enough.”
Winklevoss has now given Silbert an ultimatum, accept his firm’s “best and final offer” by 4 pm ET on July 6 — or face a lawsuit on July 7.
The offer pitched calls on DCG to make a $275 million payment by July 21, an additional $355 million before July 21, 2025 and a final payment of $835 million by July 21, 2028 — five years from the "Plan Support Agreement” date proposed by Winklevoss.
The total payment will come to $1.47 billion.
Related: Gemini, Genesis file to dismiss SEC lawsuit against Earn product
Winklevoss wants the payments to be made in the form of Bitcoin (BTC) Ether (ETH) and the United States dollar (USD), with the funds sourced from Genesis Global Trading, potential payouts from FTX and Alameda Research’s bankruptcy estates in addition to Avalanche (AVAX) and Near (NEAR) tokens it may have a claim to from Three Arrows Capital’s bankruptcy estate.
Cointelegraph reached out to DCG for comment but did not receive an immediate response.
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The lending platform’s team will begin offering loans directly to some borrowers instead of relying solely on pool delegates to provide capital.
Web3 lending platform Maple Finance has announced the launch of a direct lending program, according to a June 28 fact sheet from the platform’s development team. The program is intended to replace services previously provided by Celsius, BlockFi and other now-bankrupt lenders.
The first lending pool will be available sometime in July, the company stated.
Introducing Maple Direct, the new lending arm of Maple Finance.
— Maple (@maplefinance) June 28, 2023
With the formation of Maple Direct, Web3 now has a specialist digital native lender and launches to meet the growing institutional demand for a trusted direct lending desk in Web3.https://t.co/Q4jfnABk3R
Maple Finance is a blockchain institutional capital marketplace. It is used by Web3 businesses to obtain loans, allowing them to finance product launches or expansions. In the past, Maple relied on credit professionals, called “pool delegates,” to provide capital for these loans. For example, Celsius used Maple to create a Wrapped Ether (WETH) lending pool in February 2022.
But in the bear market of mid-to-late 2022, some of the largest Web3 lenders went bankrupt. Celsius closed up shop in July, BlockFi went belly up in November, and Genesis declared bankruptcy in January.
In the June 28 announcement, the Maple team stated that it will now fulfill the role of a lender on the platform in some cases. Using its own credit underwriting expertise, it will provide capital from institutional allocators to creditworthy borrowers. This means that if a potential borrower can’t get loans from one of the other providers, the person may be able to obtain them from Maple through its Maple Direct program.
Related: Celsius seeks to convert alts to Bitcoin and Ether under reorganization plan
According to the Maple team, this new program is necessary because major Web3 lenders have “exited the space” and traditional lenders such as banks “do not have the necessary focus or expertise to underwrite to the innovative group” of Web3 technology firms.
The team said it will launch its first direct lending pool sometime in July, which will focus on lending to “infrastructure, asset management, [and] liquidity providers.” The team has invited capital allocators to earn yield through the program, saying that it suits the needs of “Crypto Funds, DAOs, VCs, HNWI, Yield Aggregators, [and] Family Offices” looking for a return on their investments.
Maple will also “continue to expand its existing services,” the announcement said, implying that Maple Direct will not replace the current platform that features competing lenders.
Lenders at Maple Finance suffered from the FTX and Alameda Research bankruptcies in November. Borrower Aurus Global missed one of its payments as a result of fallout from these events, and Maple also cut ties with borrower Orthogonal Trading over what it saw as misrepresentations. But the platform bounced back quickly, launching version 2.0 of its software in December.
The FTX debtors alleged that the claim was filed "without any advance notice," and they were not invited to participate in the mediation.
Just a month after bankrupt cryptocurrency exchange FTX was seeking $4 billion from the also bankrupt crypto lender Genesis, it is now contesting a claim that it is entitled to nothing.
According to a June 2 court filing in a New York Bankruptcy Court, the FTX debtors have raised an objection to Genesis’ estimation that they are entitled to claims totalling ‘$0.00’ – as stated by Genesis in an estimation procedures motion on June 1.
FTX debtors alleged they were not “invited to participate” in the mediation and the motion was filed “without any advance notice to the FTX debtors.”
It was reiterated in the filing that the zero-dollar claim estimation, as outlined in the motion, was deemed “critical” by the Genesis debtors to prevent any delays, and promptly move forward with the “confirmation of a Chapter 11 plan.”
FTX debtors refuted a statement made by Genesis debtors that they worked with “all parties” of interest to create a plan structure.
It was further argued that the FTX debtors "are by far the largest unsecured creditors in the Genesis Debtors' Chapter 11 cases" and crucial that they participate in the mediation, noting:
“The mediation is a waste of estate resources without the inclusion of the FTX Debtors and should not continue without the FTX Debtors’ involvement.”
It was only on May 3 that lawyers for FTX were seeking almost $4 billion from Genesis in a New York Bankruptcy Court, under bankruptcy laws which allow it to recoup “avoidable transfers” that occur in a 90-day period before a company declares bankruptcy.
The FTX debtors have filed a motion for relief from the stay – requesting that the court lift the automatic stay, pausing legal proceedings against Genesis, when it filed for bankruptcy.
It was requested that the motion is set to be heart by the court on June 15.
Related: SBF wants to subpoena documents from old FTX/Alameda law firm to use in his defense
The most recent update regarding the reimbursement of creditors, came from Digital Currency Group (DCG), the parent company of crypto firm Genesis Capital.
It had reported no solution to its “outstanding intercompany obligations” that could help reimburse creditors.
During this period, DCG was engaged in a mediation period with Genesis in response to demands made by creditors.
Back in February, the firm had put forward a settlement plan, anticipating that Genesis creditors would receive an 80% recovery of funds after the company filed for Chapter 11 bankruptcy.
Magazine: Can you trust crypto exchanges after the collapse of FTX?
The bankrupt crypto exchange wants to recoup billions from the bankrupt crypto lender claiming it was “instrumental” to FTX’s “fraudulent” business model.
Cryptocurrency exchange FTX is seeking to recover around $4 billion from similarly bankrupt crypto lender Genesis and a still-solvent British Virgin Islands-based entity — part of efforts to recover value for creditors.
In a May 3 court filing in a New York Bankruptcy Court, lawyers for FTX sought $1.8 billion in loans and a $273 million collateral pledge allegedly given to Genesis from FTX’s sister trading firm Alameda Research.
FTX is also seeking to claw back $1.6 billion in withdrawals allegedly made by Genesis and a further $213 million purported to be withdrawn by its BV-based entity GGC International from the exchange before it collapsed into Chapter 11 bankruptcy on Nov. 11.
FTX moves to claw back $3.9 billion from Genesis.
— FTX 2.0 shareholder (in spe) (@AFTXcreditor) May 3, 2023
1. $2.1 billion loan repayments/collateral pledge
2. $1.8 billion FTX exchange withdrawals pic.twitter.com/1SsW8yoPck
The filing claims Genesis was “largely repaid” its nearly $8 billion in loans made to Alameda, “unlike other FTX creditors and customers.”
FTX alleged the bankrupt lender was “one of the main feeder funds for FTX and instrumental to its fraudulent business model.”
Related: Celsius eyes merge of entities as creditors claim distinctions were a ‘sham’
The exchange’s lawyers are seeking the clawback under bankruptcy laws that allow it to recoup “avoidable transfers” that occur in a 90-day period before a company declares bankruptcy.
Previous clawbacks by FTX have focused on $3.2 billion in payments made to its former executives, a $460 million investment made by Alameda into venture capital firm Modulo Capital and around $93 million in political donations made by founder Sam Bankman-Fried and other former top brass.
Crypto Twitter Hall of Flame: Gabriel Haines: Shirtless shitposting and hunting SBF on the meme streets
Gemini crypto exchange has entered into a 30-day mediation process with bankrupt crypto broker Genesis and its parent company Digital Currency Group (DGC) to find a resolution for Gemini Earn users who lost their assets when the broker went under. Court filings indicate that the firm owes more than $3.8 billion to its largest 50 creditors, […]
The post Gemini and Genesis Set To Enter 30-Day Mediation Process To Reach Final Resolution for Exchange’s Earn Users appeared first on The Daily Hodl.
Genesis is starting a 30-day meditation with its key creditors as its bankruptcy proceedings are close to hitting the four-month mark.
Crypto lender Genesis and its key creditor group have agreed to a 30-day mediation process in an attempt to move forward with a final restructuring plan, though one company is expressing "frustration" over the pace of progress.
On April 30, Gemini tweeted that Genesis, its parent company Digital Currency Group (DCG), its Unsecured Creditors Committee (UCC) and Gemini have agreed to a 30-day mediation process in court on April 28.
Gemini said its aim is to "drive to a final resolution as soon as possible, and that it was "supportive" of mediation. Gemini however added it had “expressed our frustration” regarding “the pace of progress among the parties and the need for urgency.”
2/ Gemini is supportive of mediation and working with the parties to bring this to a conclusion. We have also expressed our frustration on the record on the pace of progress among the parties and the need for urgency. The next status conference with the Court will be on May 4th.
— Gemini (@Gemini) April 30, 2023
The mediation is to move forward on a proposed bankruptcy exit plan submitted in February that expected creditors to recover 80% of lost funds. The plan is backed by DCG but the UCC opposed the restructuring deal wanting better terms.
Genesis is slated to next appear in bankruptcy court on May 4. Sean O’Neal, a lawyer for Genesis, said in court on April 30 that it hopes to have two mediation sessions before May 8 with the deal's final terms made public after the mediation period.
A mediator will need to be selected by Genesis and the UCC. O’Neal said potential mediators have started to be contacted and the process will be outlined to the court once one is selected.
Related: Binance.US, Alameda, Voyager Digital and the SEC — the ongoing court saga
On April 25, DCG expressed its thoughts on the matter when Genesis filed its motion for mediation.
DCG Statement on Genesis filing Motion for Mediation: pic.twitter.com/pRluUnL49C
— Digital Currency Group (@DCGco) April 25, 2023
The crypto conglomerate said the settlement would “prolong the court process” due to the renewed demands and added it was “difficult to understand the rationale” of Genesis creditors as they had given “limited engagement” since the plan proposed in February.
Genesis filed for Chapter 11 bankruptcy in a New York District Court in January, estimating its liabilities were between $1 billion and $10 billion with assets in the same range.
The crypto lender was one of several firms hit by liquidity issues in the wake of the collapse of FTX.
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The crypto conglomerate reported that falling crypto prices and the fallout from Three Arrows Capital’s loan default to Genesis affected its results.
Cryptocurrency venture capital conglomerate Digital Currency Group (DCG) has reported losses of over $1 billion in 2022 due largely to the contagion relating tocollapse of crypto hedge fund, Three Arrows Capital (3AC).
DCG reportedly lost $1.1 billion last year, according to its Q4 2022 investor report, and said the results “reflect the impact of the Three Arrow Capital default upon Genesis” along with the “negative impact” from falling crypto prices.
Genesis is the lending arm of DCG, the firm filed for Chapter 11 bankruptcy in late January. Genesis is 3AC’s largest creditor as the company loaned the now-bankrupt hedge fund $2.36 billion, 3AC filed for bankruptcy in July 2022.
DCG’s fourth-quarter losses came to $24 million while revenues came in at$143 million.
Full-year 2022 revenues for DCG came in at $719 million. The firm held total assets of $5.3 billion with cash and liquid holdings of $262 million and investments — such as shares in its Grayscale trusts — amounted to $670 million.
The remaining assets were held by divisions of its asset management subsidiary Grayscale and DCG’s Bitcoin (BTC) mining business Foundry Digital.
Its equity valuation came in at $2.2 billion with a price per share of $27.93 which the report said was “generally consistent with the sector’s 75%-85% decline in equity values over the same period.”
It’s a significant decline from just over a year ago, when DCG declared on Nov. 1, 2021, that its valuation was more than $10 billion following the sale of $700 million worth of shares to companies like Alphabet Inc., Google’s parent company.
Related: Genesis Capital’s fall might transform crypto lending — not bury it
However, the company said it “hit a milestone” with the restructuring of Genesis.
The agreement proposed earlier in February would see DCG contribute its equity share in Genesis’ trading entity and bring all Genesis entities under the same holding company and see its trading entity sold off.
DCG would also exchange an existing $1.1 billion promissory note due in 2032 for convertible preferred stock. Its existing 2023 term loans with an aggregate value of $526 million would also be refinanced and made payable to creditors.
A Genesis creditor said the plan “has a recovery rate of approximately $0.80 per dollar deposited, with a path to $1.00” for those owed money by the firm.
