Gemini Earn users heaved a collective sigh of relief as Gemini, Genesis Global Capital (Genesis), and Digital Currency Group reached an agreement over the Earn Program.
Digital Currency Group will also look to exchange a $1.1 billion note for stock and refinance around $1 billion in loans.
Gemini, Genesis, and DCG Finally Reach An Agreement
In an announcement that can be described as music to their ears, users of Gemini’s Earn program have moved closer to recovering their funds, as the Winklevoss-founded exchange Gemini, Genesis Global Capital LLC (Genesis), and Digital Currency Group (DCG) finally reached an agreement. The agreement will give users access to funds that have been in limbo for months as Gemini and Genesis wrangled with one another.
The agreement was announced on Twitter by the co-founder of the Gemini exchange, Cameron Winklevoss, who tweeted,
“Today, @Gemini reached an agreement in principle with Genesis Global Capital, LLC (Genesis), @DCGco, and other creditors on a plan that provides a path for Earn users to recover their assets. This agreement was announced in Bankruptcy Court today.”
Details Of The Agreement
According to one of the lawyers representing the debtors, all parties involved agreed to the deal in principle and were working on finishing the term sheet, which could be filed as early as Tuesday. The deal currently involves Digital Currency Group, Genesis Global Capital, and two ad hoc creditor groups. These also include those representing over $2 billion in claims against Gemini Global Capital and Gemini Trust Company.
Under the agreement, Gemini has committed to contributing $100 million more toward its Earn users. A lawyer representing Gemini stated,
“Gemini founders Cameron and Tyler Winklevoss are doing this because they believe in the debtors’ reorganization and the Gemini platforms, and they want to do the right thing for their users.”
Additionally, Digital Currency Group will also exchange its existing $1.1 billion note which is due in 2032, in exchange for convertible preferred stock. It will also look to refinance its existing 2023 term loans in two tranches. These will be payable to creditors with an aggregate total value of $500 million.
The Gemini-Genesis Spat
Gemini and Genesis have both been locked in a bitter public spat over the former’s Gemini Earn program. The program allowed users to deposit their crypto assets and earn a yield ranging anywhere between 0.45% and 8%, similar to what a bank account would offer. The primary partner of the program was Genesis. However, due to significant market turmoil, Genesis halted withdrawals in November 2022, an action that led to users of the Earn program and Winklevoss to threaten the company and its founder, Barry Silbert, with legal action. Winklevoss demanded that Genesis come up with a plan to repay the $900 million loan given by Gemini to Genesis Global.
On the 19th of January, Genesis filed for Chapter 11 bankruptcy and joined a growing list of companies filing for bankruptcy. At the time, Genesis cited the collapse of Three Arrows Capital (3AC) and FTX as the primary reason for the company filing for bankruptcy. Subsequently, federal regulators in the United States opened an investigation into Gemini’s Earn program, with the United States Securities and Exchange Commission (SEC) charging the company with violation of securities laws.
A Significant Step Forward
Meanwhile, Cameron Winklevoss called the agreement a critical step towards the recovery of assets for all of Genesis’ creditors, in addition to highlighting Gemini’s intention to contribute an additional $100 million towards the Earn program. He also added that while there remains a significant amount of work to be done, he remained confident that there is a framework to move forwards and build upon. Genesis’ interim CEO Derar Islim stated,
“I am grateful to the talented team at Genesis for their ongoing dedication and commitment to client service and excited about working together to build Genesis for the future. I also want to express my deep appreciation to all of our clients for their continued patience and loyalty as we work through a resolution for our lending business.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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