Winklevoss Has the ‘Final Offer’ for Restructuring of Bankrupt Crypto Lender Genesis

Cameron Winklevoss, the co-founder of crypto exchange Gemini, has put forward the “best and final” offer for the restructuring of bankrupt crypto lender Genesis Global.

In an open letter published on Monday, July 3, Winklevoss said that the proposal is the “floor” that the creditors will accept. The offer includes a $275 million forbearance payment along with a $355 million debt tranche due in two years. Additionally, there’s an $835 million debt tranche due in five years.

Digital Currency Group (DCG), the parent of Genesis Global, shall retain the proceeds from the sale. On the other hand, creditors would get the funds from the disposal of all the Genesis companies.

Around hundreds of thousands of Gemini customers have approximately $900 million invested in Earn, a program that allows them to lend coins and earn yields through Genesis. However, Genesis halted withdrawals in November due to financial difficulties caused by the collapse of the FTX exchange. The bankruptcy filing in January disclosed that the top 50 unsecured claims added up to roughly $3.4 billion.

Mediation Talks Between Gemini and Genesis

Genesis, DCG, and creditors like Gemini are currently engaged in mediation discussions overseen by a court-appointed mediator. In June, a bankruptcy judge granted them additional time to develop a new proposal for payouts. DCG also missed a payment of $630 million to Genesis in mid-May.

However, Winklevoss expressed optimism about working with the Genesis Special Committee to conclude the mediation process and move forward with the bankruptcy restructuring.

In another development, crypto exchange Gemini is fighting the U.S. Securities and Exchange Commission (SEC) over its yield-bearing Earn Product, which according to the SEC classifies as a security.

Back in May 2023, Gemini filed with the court to dismiss the lawsuit. Gemini stated that its Earn product, which allowed customers to lend out coins and earn yields, was not classified as a security. Genesis also emphasized that these transactions were essentially loans. As a result, Genesis requested the court to dismiss the complaint or, as an alternative, remove the SEC’s requests for a permanent injunction and disgorgement.