February 6, 2023

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The famous digital currency exchange Gemini’s creditor committee has proposed a strategy. This strategy aims at resolving the liquidity problems experienced by the crypto lending platform Genesis as well as its parent firm Digital Currency Group (DCG).

The crypto lender put a stop to consumer withdrawals a week after the declaration of bankruptcy by FTX (the crypto exchange established by Sam Bankman-Fried).

Creditor Committee of Gemini Suggests a Strategy for the Liquidity Crisis of DCG and Genesis

This move was taken by the platform amid the increasing liquidations. As a consequence, Genesis halted the funds related to its consumers taking into account the Gemini crypto exchange. At present, a liquidity resolution strategy has been proposed by the creditor committee to the crypto lending firm Genesis and Digital Currency Group (DCG).

A company providing services related to finance and investments “Houlihan Lokey” has offered a plan in this regard. Cameron Winklevoss (the co-founder of Gemini) expressed his opinion on this matter noting that Houlihan Lokey’s plan offers a liquidity solution for DCG and Genesis along with giving a path to recover the assets.

In Winklevoss’ words, the creditor committee anticipates the earliest reaction this week.

In February 2021, when the bull run was at its peak, the crypto exchange company Gemini collaborated with Genesis. The partnership was made to launch Gemini’s latest product entitled Gemini Earn. The respective product enabled the consumers to earn an approximately 7.4% yield on the crypto deposits.

Nonetheless, Genesis halted the withdrawals in the mid of November. The platform decided to freeze Gemini Earn funds during the procedure.

DCG Executive Says  the Move Aims at Regaining the Trust Lost Due to FTX Fiasco

At that time, the vice president of marketing and communications at DCG – Amanda Cowie – mentioned that the move was taken while responding to the severe market dislocation as well as the decrease in trust around the industry because of the FTX debacle.

The total amount owed by Digital Currency Group to the creditors’ committee is equal to $1.8 billion. Almost half of this sum (approximately $900 million) is owed by DCG and Genesis exclusively to Gemini.

In the same vein, Bitvavo (a crypto exchange of Dutch origin) stated that its $297 million got stuck under the Digital Currency Group (DCG).

This amount equals up to eighteen percent of the total $1.69B which the crypto exchange deposits and manages overall. But, DCG has asserted that the respective funds are kept under its autonomous subsidiary Genesis.

During the recent downturn of the market, apprehensions have increased regarding Grayscale Capital (the other group of DCG) which is going through financial pressure due to the recent price collapse of the chief crypto token Bitcoin.

According to the creditor committee’s proposal, the assets of the crypto lending firm Genesis Global Capital should be liquidated after the halt of withdrawals.

Formerly this year, Gemini dismissed nearly twenty percent of the company’s staff. Gemini has been operating in close cooperation with DCG and Genesis since the 22nd of November to find out a suitable way to provide the assets back to the clients.

The establishment of the creditor committee took place on the 6th of December after the halt of Gemini Earn. Subsequently, Houlihan took the position of the creditor committee’s financial advisor on the 9th of the current month.

Genesis has the option to gather liquidity via a debt-restructuring project, compelling the DCG to recompense $1.7B liability in the shortest time possible.


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