The legal team representing Gemini criticized Digital Currency Group’s recent remuneration plan for creditors of Genesis Global, the now-insolvent crypto trading subsidiary of DCG.
On September 13, DCG sent a bankruptcy proposal claiming Gemini Earn users will receive 95-110% of their claims. The filing also claimed that unsecured creditors could recover 70-90% of their assets.
Highlighting the fact that no company offers such high recovery rates in Chapter 11 bankruptcy, DCG noted the expected recovery for unsecured creditors lies at the 48.5%% mark. The firm, however, dissed Gemini in its filing, stating,
“If Gemini were to agree to provide $100 million to Gemini Earn users under the Proposed Agreement, as it previously did, there would be little doubt Gemini Earn users would receive more than full recovery.”
In response, Gemini lawyers submitted a filing cautioning users against the proposal. Calling the proposed recovery rates “a total mirage,” the document claimed that DCG’s restructuring plan serves as bait to lure Gemini lenders into accepting a proposal that pays them less than what they are owed.
As per DCG’s plan, the assets will be transferred in two portions over the course of seven years. Gemini lawyers alleged that agreeing to receive a “fractional share of payments” over seven years will expose users to counterparty risks, adding,
“To distract the Genesis creditors from the inconvenient facts of its facially inadequate and inequitable proposal, DCG touts proposed recovery rates that are a total mirage — misleading at best and deceptive at worst.”
In February 2021, Gemini released the Gemini Earn service in partnership with Genesis. During FTX’s historical meltdown in November 2022, Genesis closed all withdrawals for Gemini before declaring insolvency in January 2023. Since then, Gemini has been engaged in a legal conflict with DCG to recover the assets of Gemini Earn creditors.
Written by
Ayush Pande
Ayush Pande is a hardware, gaming, and crypto writer based in India. He's a tech enthusiast who's fascinated by the potential of blockchain technology.
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