Genesis, Gemini, DCG Group starts mediation at risk of $630 million default, what this means for crypto

Gemini exchange has updated Earn users of a new process to mediate the final resolution of DCG group’s $630 million debt owed to Genesis.
The mediation will be focused on DCG’s contribution to the benefit of Gemini’s Earn users.
The DCG update is expected to have an impact on Gemini’s Earn users who lost their investment in the exchange’s product.

Gemini, an American cryptocurrency exchange and custodian has updated its users about the progress in the mediation process to get users’ investment back. The next 30-days are critical to the mediation process between Genesis, Gemini and the DCG Group.

Two key dates for Earn users are May 8, since mediation meetings are scheduled before that and May 9 to 11 when DCG owes Genesis bankruptcy estate $630 million. There is a risk of the DCG’s default on its debt and this could negatively affect Earn users.

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Update for Gemini Earn users who lost funds to the investment product

Gemini Earn users lost their investment in the exchange's high yield investment product when the crypto exchange loaned the funds to Genesis Trading that loaned it to the Digital Currency Group (DCG).

DCG is expected to return the $630 million loan owed to the Genesis bankruptcy estate. If DCG defaults on its debt, Earn users are likely to be expected to wait longer for the mediation proceedings to complete, for a resolution.

Gemini update for Earn users

Why Earn users lost their investment in Gemini’s product

Gemini Earn is a high-risk high yield investment product where the exchange is not liable for defaults. Gemini Earn loaned $900 million to Genesis Trading, the OTC Bitcoin trading desk in exchange loaned the funds to the DCG Group.

The DCG Group couldn’t return the loan in full and Genesis Trading was forced to pause withdrawals. This meant Earn users were locked out of their investment until DCG pays back what it owes to the Genesis bankruptcy estate.

Gemini exchange is in no position liable to make Earn users whole as the investment product was marketed as “high risk” with all the terms and conditions laid down for users.

This makes the 30-day mediation that Gemini has proposed, key to Earn users. The outcome of the mediation and whether DCG Group returns the debt it owes to Genesis are the two issues that Earn users need to follow closely.

1/ Earn update: This past week, Genesis, Digital Currency Group (DCG), the Unsecured Creditors Committee (UCC), the Creditor Committee, and Gemini agreed to start a 30-day mediation process to drive to a final resolution as soon as possible.
— Gemini (@Gemini) April 30, 2023

Colin Wu, a Chinese journalist highlighted the importance of this week for Earn users in his recent tweet:

This week, Genesis, DCG, Creditors Committee and Gemini agreed to start a 30-day mediation process to drive to a final resolution as soon as possible. If DCG is unable to pay and/or restructure its debt of $630m on May 9th - 11th, DCG risks defaulting on its obligations.…
— Wu Blockchain (@WuBlockchain) May 1, 2023

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