Gemini and Genesis have reached an agreement over the Earn program. The exchange will contribute up to $100 million in funds.
Crypto exchange Gemini and lending company Genesis have reached a $100 million agreement over the Earn program. The two were at loggerheads in the past few months, and the agreement will offer a better outcome for clients and stakeholders involved in the incident. The press release, published on Feb. 6, states that it will “in principle lays out a framework for a global resolution that will maximize value for all Genesis clients and stakeholders.”
Genesis will exchange its existing $1.1 billion note due in 2023 for convertible preferred stock to be issued by Digital Currency Group (DCG) as part of Genesis’ bankruptcy plan. DCG will also refinance its existing 2023 term loans through a new, junior secured term loan in two tranches made payable to creditors in the aggregate total value of approximately $500 million. On Gemini’s part, it will contribute up to $100 million in additional funds to Earn users.
Gemini co-founder Cameron Winklevoss tweeted about the development. He stated that the plan was a “critical step” towards recovering assets for Genesis creditors. Gemini has also posted a page that will provide updates on the matter, which will see updates every Tuesday and Friday until a resolution is reached.
Creditors can breathe a sigh of relief as it appears that a resolution might arrive speedily. However, both Gemini and Genesis look like they face a bumpy few months ahead.
In a Pickle
Gemini is facing strong legal trouble as the United States Securities and Exchange Commission (SEC) goes after it. The SEC has charged Gemini for the unregistered offering and sale of securities. Tyler Winklevoss called the charge a “manufactured parking ticket.”
Gemini is also facing an investigation by the New York Department of Financial Services for allegedly misleading customers into thinking the funds were protected by the Federal Deposit Insurance Corporation (FDIC). Investors have also filed a class action lawsuit against Gemini.
The exchange’s troubles have extended to laying off 10% of the workforce. It joins a long list of companies downsizing as a result of the effects of the FTX collapse.
Genesis No Better Off Than Gemini
Genesis is also facing its own share of troubles as it attempts to navigate its bankruptcy. A recent pact with a creditor revealed that DCG was intending to sell Genesis’ crypto trading business and leading arm.
Genesis creditors expect to recover 80% of their funds due to the restructuring. The company is confident that it will exit its bankruptcy and expects this to happen by mid-May 2023.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.