Crypto Exchange Gemini Eyes Forbearance Following DCG’s $630M Payment Default

If Gemini fails to reach an agreement with DCG, the company intends to collaborate with Genesis Capital to propose terms for a reorganized plan.

Significant development has shaken the cryptocurrency market, with Gemini, a leading cryptocurrency exchange, considering forbearance for the Digital Currency Group (DCG).

DCG has recently defaulted on a $630 million payment, prompting Gemini to contemplate offering some leniency in repayment.

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A forbearance agreement allows a borrower, in this case, DCG, to either decrease their mortgage payment or halt it entirely for a specified duration. However, the borrower must eventually repay the reduced or paused amount.

Gemini’s decision to consider such an option hinges on whether DCG engages in negotiations in good faith to arrive at a consensual agreement.

The clash between Gemini and DCG began after Genesis, a subsidiary of DCG, filed for Chapter 11 bankruptcy in January 2023.

Following the filing, Cameron Winklevoss, co-founder of Gemini, threatened legal action against DCG and its CEO Barry Silbert concerning a $900 million loan repayment.

As per court filings, Genesis owes more than $3.5 billion to its top 50 creditors, including Gemini, Cumberland, Mirana, MoonAlpha Finance, and VanEck’s New Finance Income Fund.

If no agreement is reached, Gemini intends to collaborate with Genesis Capital to propose terms for a reorganized plan that could proceed without DCG’s consent.

In the wake of these developments, Genesis sought an extension of its exclusivity period to propose a plan, filing a motion with the bankruptcy court on May 19th.

Earlier this year, Genesis and DCG had struck a tentative agreement with creditors, submitting a full settlement to the bankruptcy court in February. Under this proposed settlement, creditors were to recover 80% of their losses due to bankruptcy. However, an escalation in creditors’ demands disrupted the initial settlement plans.

As the saga unfolds, the situation underscores the need for caution and due diligence within the rapidly evolving and complex cryptocurrency landscape.