Digital Currency Group (DCG), the parent company of crypto firm Genesis Capital, has reported no solution to its “outstanding intercompany obligations” that could help reimburse creditors.
In a May 9 announcement, DCG said it was in the middle of a 30-day mediation period with Genesis in response to creditor demands. The firm proposed a settlement plan in February in which Genesis creditors had been expected to receive 80% recovery of funds after the firm filed for Chapter 11 bankruptcy.
However, in April, Genesis creditors raised their demands, disrupting the bankruptcy proceedings and the “agreement in principle” between the two firms. Genesis reported it had between $1 billion and $10 billion in liabilities when filing for bankruptcy.
“On a parallel path and to provide further financial flexibility, DCG is in discussions with capital providers for growth capital and to refinance its outstanding intercompany obligations with Genesis,” said DCG. “We are committed to reaching a fair outcome for all and look forward to a productive resolution during this mediation period.”
In the wake of Genesis’ bankruptcy, the troubled crypto firm has often been at the center of legal issues between DCG and crypto exchange Gemini. DCG and Genesis reportedly owed roughly $900 million to Gemini’s clients locked out of their Earn funds — Genesis operated the program in partnership with Gemini. In January, Gemini co-founder Cameron Winklevoss threatened to file a lawsuit against DCG and CEO Barry Silbert if they couldn’t offer Gemini creditors “a fair deal.“
U.S. authorities have also taken action amid the businesses’ financial troubles. In January, the U.S. Securities and Exchange Commission charged Genesis and Gemini with offering unregistered securities, and the New York State Department of Financial Services was also reportedly investigating Gemini over its Earn program.
The 30-day meditation period gives DCG and Genesis until the end of May to come to resolution on the proposed restructuring plan. In its initial Chapter 11 filing, Genesis said it planned to sell its assets at auction and exit bankruptcy on May 19.