Gemini enters mediation, hopes to quickly resolve DCG dispute
The Gemini crypto exchange hopes mediation will produce a swift resolution to negotiations with Digital Currency Group (DCG) about returning funds belonging to users of the now-defunct Gemini Earn program.
In an update on April 28, Gemini stated that DCG, its bankrupt lending arm Genesis Global, the Unsecured Creditors Committee (UCC), the Creditor Committee, and Gemini itself had agreed to begin a 30-day mediation process to find a final resolution for paying victims of the Genesis bankruptcy.
Gemini also added that it expects a directive from bankruptcy judge Sean Lane guiding the mediation process as early as May 1.
In the update, Gemini said the mediation would mainly focus on DCG’s economic contribution to the bankruptcy estate for the benefit of all creditors, including Earn users, and is designed to resolve the Genesis bankruptcy plan in the shortest time possible.
Gemini further stated that the mediation process would include two meetings before May 8 and that DCG owes Gemini $630 million, which it expects to be paid back by May 9.
The crypto exchange warned that if DCG cannot pay or restructure the debt by the stipulated time, it risks defaulting on its obligations.
DCG owes $3.5 billion
Since November 2022, about 340,000 Gemini Earn customers have had no access to their funds after DCG’s lending arm, Genesis Global, halted withdrawals.
Genesis Global later declared Chapter 11 bankruptcy, taking over $3.5 billion belonging to secured and unsecured creditors.
The Gemini Trust Company, owned by the Winklevoss twins, holds the most significant claim against Genesis Global. When Genesis went under, it owed Gemini $766 million in assets leased out under the Gemini Earn program.
The two companies reached an agreement in February that would see Gemini contribute up to $100 million while DCG restructured its debts and contributed equity to its bankrupt lending arm from another of its units, Genesis Global Trading. However, there still remain a few details that need hashing out.
Gemini has been updating its customers regularly on its website about the status of the negotiations and the recovery process. It said it remains committed to making Earn users whole and that returning their assets is its highest priority.