On the 21st of December, a creditor committee with the cryptocurrency exchange Gemini presented a plan to resolve the liquidity issues of the crypto lender Genesis and its parent company DCG, Digital Currency Group. The creditor committee’s plan also provides a path for the recovery of assets.
In a tweet, Cameron Winklevoss, the president and co-founder of Gemini, confirmed that Houlihan Lokey, an American financial service company, presented a plan on behalf of the Creditor Committee to resolve the liquidity issues at Genesis and DCG. The plan is also intended to provide a path for the recovery of assets. Genesis and DCG owe users of Gemini Earn, which allows users to earn between 0.45% and 8% interest on their crypto, around $900 million.
Houlihan Lokey is a specialized financial firm in creditor advisory, and it assisted proceedings for the Lehman Brothers and WorldCom. Since the 16th of November, a few days after FTX filed for bankruptcy, users of the Gemini Earn service have been unable to access their funds. This was due to third-party contagion involving crypto lender Genesis, the firm behind facilitating the Earn service. When Genesis shuttered withdrawals, citing the collapse of FTX, Gemini’s Earn users were unable to access their funds.
The current financial situation at Genesis and DCG has been also affecting others in the industry. Bitvavo, a Dutch cryptocurrency exchange, alleged that it has €280 million, 17.5% of the total €1.6 billion it manages in deposits, stuck with Digital Currency Group. Grayscale Capital, a firm owned by DCG, is also facing financial stress. In recent days, the Grayscale Bitcoin Trust, the fund that gives investors exposure to Bitcoin without having to carry or custody the asset, has hit historic discounts to the underlying asset.