Crypto exchange Gemini said Digital Currency Group (DCG) of missing out on a $630 million payment that was due last week.
The payment relates to a loan Gemini made to the now-bankrupt crypto lender Genesis, which is the subsidiary of DCG.
Earlier this month, the firm warned that in the event DCG is unable to make the required payment or restructure its debt, the digital assets conglomerate would be at risk of defaulting on its obligations.
In the update on the company’s website, the Winklevoss twins-led exchange also said that together with creditor committees it is currently evaluating the possibility of granting forbearance to DCG as a means to prevent a default.
"Genesis and its creditors, represented by the Official Committee of Unsecured Creditors, the Ad Hoc Group of Genesis Lenders, and Gemini Trust, are working collaboratively to address Digital Currency Group’s nonpayment of approximately $627 million in dollars and BTC that was due last week during the ongoing mediation period," a Genesis spokesperson told Decrypt. "Among other things, as part of the ongoing mediation process, the parties are discussing potential terms of forbearance, a standalone chapter 11 plan for Genesis, and other options to recover assets and maximize value to stakeholders."
If a resolution cannot be achieved, the crypto exchange said it is contemplating the option of presenting an "amended plan of reorganization." This plan would be proposed independently, without requiring the consent or involvement of DCG.
"DCG continues to be engaged with the various stakeholders in the Genesis Capital restructuring process pursuant to the 30-day mediation period entered into by all parties on May 1," a DCG spokesperson told Decrypt.
Gemini seeks extension
Gemini also revealed that its legal representatives submitted a request to the Bankruptcy Court of the Southern District of New York last week, seeking a 100-day extension of the deadline to file a Chapter 11 reorganization plan, which “would have Gemini’s input if not outright support.”
This extension request seeks to provide additional time for the parties involved to navigate the bankruptcy proceedings and “facilitate the Debtors’ ongoing efforts to achieve a value-maximizing restructuring without the interruption of a competing plan,” reads the court filing.
If the court grants the request, Genesis will have until August 27 to file the plan, and Gemini will have until October 26 to accept it.
Finally, the crypto exchange said it is also preparing “the Gemini Master Claim” pursuing the recovery of more than $1.1 billion worth of cryptocurrencies that the exchange claims it is owed by Genesis.
According to the firm, Genesis has refused to return funds to as many as 232,000 users who were part of the Gemini Earn program and had active loans as of January 19, 2023.
Gemini Earn was the exchange’s high-yield investment service that had Genesis as a primary lending partner before the latter froze withdrawals in November 2022.
Earlier this year, Gemini threatened legal action against both DCG and its CEO Barry Silbert if no plans were presented to repay the $900 million loan that Gemini had extended to the crypto lender.
The two sides agreed on such a plan “in principle” in February.