By
Steve Muchoki
April 9th, 2024
Houlihan Lokey, an investment and financial services firm, has presented the liquidity resolution plan to Genesis on behalf of the creditor committee.
Earlier this week, a credit committee involving the cryptocurrency exchange Gemini proposed plans in order to resolve the liquidity issues faced by crypto lender Genesis and its parent Digital Currency Group (DCG).
A week after crypto exchange FTX declared bankruptcy, crypto lender Genesis paused withdrawals amid heavy liquidations taking place on the platform. As a result, it froze the funds of all of its clients including the crypto exchange Gemini.
Now, the creditor committee has proposed a liquidity resolution plan to crypto lender Genesis and its parent firm, Digital Currency Group (DCG). Houlihan Lokey, an investment and financial services firm, has presented this plan on behalf of the creditor committee. Gemini co-founder Cameron Winklevoss wrote:
“Today, Houlihan Lokey presented a plan on behalf of the Creditor Committee to resolve the liquidity issues at Genesis and DCG and provide a path for the recovery of assets. This plan is based on information received from Genesis, DCG, and their respective advisors to date. The Creditor Committee expects an initial response this week”.
During the height of the bull run in February 2021, crypto exchange Gemini partnered with Genesis to float its new product Gemini Earn. This product offered clients up to 7.4% interest on its crypto deposits.
However, as Genesis suspended withdrawals in mid-November last month, it decided to freeze Gemini Earn funds in the process. Back then, Amanda Cowie, vice president of communications and marketing at DCG, said: “This decision was made in response to the extreme market dislocation and loss of industry confidence caused by the FTX implosion”.
How Much Genesis Owes Gemini?
Digital Currency Group (DCG) owes a total of $1.8 billion to the creditors’ committee. Of this total amount, Genesis and DCG owe 50% i.e. $900 million to Gemini exchange alone.
Similarly, Dutch crypto exchange Bitvavo said that it has $297 million stuck with the Digital Currency Group (DCG). These assets make nearly 18% of the $1.69 billion which Bitvavo manages in deposits and other assets. However, DCG has claimed that all these outstanding funds are held by its “independent subsidiary” Genesis, and not by DCG.
Amid the recent market crisis, concerns have grown over DCG’s other group Grayscale Capital which is facing financial stress amid the recent Bitcoin price crash.