Gemini Creditor Committee Offers Solution For Genesis’ Liquidity Issue

Key Points:

• The liquidity resolution strategy was offered to Genesis by the investment and financial services company Houlihan Lokey on behalf of the creditor committee.
• The creditor committee has now presented crypto lender Genesis and its parent company, Digital Currency Group, with a liquidity resolution proposal (DCG).
• Genesis decided to freeze Gemini Earn funds at the same time that it stopped allowing withdrawals in the middle of last month’s November

Gemini – The liquidity resolution strategy was offered to Genesis by the investment and financial services company Houlihan Lokey on behalf of the creditor committee.

Earlier this week, ideas to address the liquidity concerns experienced by bitcoin lender Genesis and its parent Digital Currency Group were put up by a credit committee that included the cryptocurrency exchange Gemini (DCG).

A week after cryptocurrency exchange FTX filed for bankruptcy, cryptocurrency lender Genesis halted withdrawals due to the platform’s intense liquidations. All of its clients’ funds, including those of the cryptocurrency exchange Gemini, were consequently frozen.

The creditor committee has now presented crypto lender Genesis and its parent company, Digital Currency Group, with a liquidity resolution proposal (DCG). This proposal was made by the investment and financial services company Houlihan Lokey on behalf of the creditor committee. Cameron Winklevoss, a co-founder of Gemini, 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”.

Gemini and Genesis collaborated to launch their new product

On cryptocurrency deposits, this offering gave customers interest rates of up to 7.4%.

However, Genesis decided to freeze Gemini Earn funds at the same time that it stopped allowing withdrawals in the middle of last month’s November. “This decision was made in response to the tremendous market dislocation and loss of industry trust caused by the FTX implosion,” stated Amanda Cowie, vice president of communications and marketing at DCG, at the time.

The creditors’ committee is owed $1.8 billion in total by Digital Currency Group (DCG). Genesis and DCG owe the Gemini exchange alone $900 million, or 50% of the total amount.

In a similar vein, Dutch cryptocurrency exchange Bitvavo claimed to have $297 million in obligations to the Digital Currency Group (DCG). Nearly 18% of the $1.69 billion in deposits and other assets that Bitvavo administers come from these assets. All of these unclaimed assets, according to DCG, are really kept by Genesis, a “autonomous subsidiary,” and not by DCG.

Concerns concerning Grayscale Capital, another division of DCG that is experiencing financial strain as a result of the recent drop in the price of bitcoin, have intensified in light of the recent market crisis.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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