DCG’s Genesis Crypto Lending Unit Reaches Creditor Agreement

Digital Currency Group (DCG), a leading cryptocurrency venture capital firm, has reached an agreement in principle with creditors of its crypto lending subsidiary, Genesis.

According to a court filing published on August 29, the estimated USD equivalent recoveries could account for between 70% and 90% of unsecured creditors if the amended plan is implemented.

According to the filing, the amended plan could result in between 65% and 90% in-kind recovery, depending on the value of the digital asset.

Overview of the in-principle agreement between DCG, debtors and creditors. Source: Kroll.com

DCG would also enter into the new debt facilities and the partial repayment agreement to satisfy its existing obligations to creditors, which include $630 million in unsecured loans due in May 2023 and $1.1 billion under an unsecured promissory note due in 2032.

The debts consist of a $328.8 million, two-year first-lien facility and an $830 million, seven-year second-lien facility.

Following the partial repayment agreement, DCG would also make installment payments totaling $275 million before the plan’s effective date, per the filing.

Genesis is one of many crypto lending companies that had to declare bankruptcy in January 2023 due to the massive bear market of 2022. The business owed over $3.5 billion to its top 50 creditors, which included Gemini and VanEck’s New Finance Income Fund.

As previously reported, Genesis halted withdrawals in the middle of November 2022, citing unprecedented market volatility caused by the collapse of the FTX cryptocurrency exchange.

The company asserted that the event led to an “abnormal” number of withdrawals that exceeded its liquidity.