The New-York based crypto exchange Gemini announced on May 21 that the prominent Digital Currency Group (DCG) failed to settle a payment of $630 million that has passed the payday. Initially, before the liquidation of Genesis, an affiliate company to DCG, Gemini, had issued a loan to the bankrupt crypto lender.
At the beginning of May, the Gemini team issued a notice concerning the loan payment. The Gemini report was issued when the subsidiary company Genesis was struggling financially following the fallout of FTX.
DCG Fails to Comply with Gemini Loan Agreement
In the May 1 notice, the Gemini group mentioned that if the DCG group failed to honor the loan agreement, the crypto firm would take legal action.
In a previous report, the attempt to restore the operation of Genesis compelled the co-founder of Gemini, Cameron Winklevoss, to issue a demand for payment report to DCG. In his letter, Cameron threatened to sue DCG for failing to settle the $900 million loan.
Later the Genesis team filed for Chapter 11 of bankruptcy protection in the attempt to restructure. The court report indicated that Genesis owed over 50 creditors assets worth $3.5 billion.
The creditors listed presented by Genesis included Mirana, Cumberland, MoonAlpha, and Gemini. The submission of Genesis bankruptcy filing compelled the Winklevoss twins to team up with officials from Gemini, DCG, and the creditors’ committee to deliberate on the practical loan repayment method.
Genesis to Face Legal Action
The team pushed for adopting a 30-day meditation process to allow DCG to settle the outstanding balances. The engagement aimed at enabling the committees to make an informed decision on ways to recover assets from DCG.
In their argument, the committee stated that if they fail to reach a concrete solution, the Gemini team will work with DCG to review the reorganization plans. Before this, the Gemini team had planned to adopt a forbearance approach, which allows the DCG to reduce the debt under specific agreements.
As such, the DCG team will be required to settle the agreed amount or stop making any payment. In a separate report, the Gemini team revealed that it had requested a deadline extension.
A report submitted by the Gemini legal team urged the prosecutors at the Bankruptcy Court in the Southern District of New York to allow them to file for Chapter 11 of the restructuring plan in the next 100 days.
Notably, if the court approves the extension request, Genesis must submit the amended restructuring plan on August 27. After submission, the Gemini must issue their responses by October 26.
A few days ago, the crypto exchange announced plans to launch Gemini Master Claim. Under the new master claim, the Gemini team plans to recover crypto assets worth $1.1 billion, which it owed Genesis.
On January 19, it was reported that Genesis owes over 232000 customers who had invested measurable amounts of money in the suspended Gemini Earn Program.