Crypto lender Genesis and its key creditor group have agreed to a 30-day mediation process in an attempt to move forward with a final restructuring plan. Although Gemini, one of the involved companies, has expressed support for the mediation process, it has also voiced frustration over the pace of progress in the negotiations.
Genesis, its parent company Digital Currency Group (DCG), its Unsecured Creditors Committee (UCC), and Gemini all agreed to the 30-day mediation process in a court session on April 28. The mediation is intended to advance a proposed bankruptcy exit plan submitted in February that expected creditors to recover 80% of lost funds. The plan is backed by DCG, but the UCC has opposed the restructuring deal, seeking better terms.
In a tweet on April 30, Gemini stated that its aim is to drive to a final resolution as soon as possible and that it was supportive of mediation. However, Gemini also said it had “expressed our frustration” on the record regarding “the pace of progress among the parties and the need for urgency.” The next status conference with the court is scheduled for May 4th.
According to Sean O’Neal, a lawyer for Genesis, the company hopes to have two mediation sessions before May 8, with the deal’s final terms to be made public after the mediation period. A mediator will need to be selected by Genesis and the UCC in order to move forward with the process. O’Neal said potential mediators have started to be contacted, and the process will be outlined to the court once one is selected.
On April 25, DCG expressed its thoughts on the matter when Genesis filed its motion for mediation. In a statement, the crypto conglomerate said the settlement would “prolong the court process” due to the renewed demands and added it was “difficult to understand the rationale” of Genesis creditors as they had given “limited engagement” since the plan proposed in February.
Genesis had filed for Chapter 11 bankruptcy in a New York District Court in January, estimating its liabilities were between $1 billion and $10 billion, with assets in the same range. The crypto lender was one of several firms hit by liquidity issues in the wake of the collapse of FTX.
The 30-day mediation process is intended to help the parties reach a mutually agreeable resolution as quickly as possible. However, the pace of progress in the negotiations thus far seems to have frustrated some of the involved companies, such as Gemini, which has called for more urgency in the discussions.
While the next status conference with the court is scheduled for May 4th, it remains to be seen whether or not the parties will be able to reach a final resolution in the given timeframe. If not, it is likely that the mediation process will continue, potentially prolonging the bankruptcy process even further.
In the meantime, cryptocurrency market participants await the outcome of the mediation process with bated breath, as the fate of billions of dollars in investor funds hangs in the balance. Hopefully, the mediation will provide a satisfactory resolution for all involved parties, allowing them to move forward with a restructuring plan that ensures creditors are able to recover at least some of their lost funds.
Regardless of the outcome, the situation highlights the inherent risks and uncertainties inherent in the nascent cryptocurrency market, and the importance of proper regulation and oversight in order to protect investors and ensure the stability of the market as a whole.
