Following its high-profile bankruptcy three weeks ago, the lending arm of crypto institutional brokerage Genesis has reportedly agreed on an in-principle restructuring plan.
According to an anonymous source cited by CoinDesk, the deal involves Genesiss main creditors as well as its parent company, Digital Currency Group, which is run by crypto billionaire Barry Silbert. Genesis reportedly owes these main creditors approximately $2.4 billion, per CoinDesk, out of the approximately $3.4 billion in liabilities the company cited in its bankruptcy filing.
The deal involves selling off the bankrupt entities of Genesis as well as winding down the Genesis loan book. It also includes refinancing a $100 million loan in Bitcoin and a $500 million loan in cash that DCG borrowed from the struggling crypto brokerage.
The initial agreement is potentially a major step in resolving one of the most high-profile bankruptcies in the crypto industry in the past year.
Genesis and DCG did not immediately respond to comment when contacted by Fortune.
The struggles of the cryptocurrency brokerage have largely tracked with the onset of so-called Crypto Winter, while Genesiss Chapter 11 filing underscores the connections between it and other major players in the industrymany of which are likewise now insolvent or in trouble.
Three Arrows Capital, a crypto hedge fund, was one of the first major firms to go under in 2022. It had taken out a $2.36 billion loan from one of Genesiss subsidiaries, Genesis Asia Pacific Pte. Ltd., which eventually filed for bankruptcy as well.
Months later, the now-bankrupt cryptocurrency exchange FTX and its associated crypto hedge fund Alameda Research collapsed. Genesis had lent hundreds of millions of dollars to Alameda, according to the Wall Street Journal.
Genesis subsequently laid off 30% of its staff, and its lending unit, Genesis Global Capital, suspended customer withdrawals. This brought the firm in direct conflict with Gemini, whose users had money tied up in Gemini Earn, a yield-bearing product built in conjunction with Genesis.
Geminis founders, the twins Cameron and Tyler Winklevoss, who are most famous for their role in the founding of Facebook, wrote an open letter to Barry Silbert of DCG. They demanded that he return the $900 million worth of Gemini funds locked up in Genesis. Shortly thereafter, the SEC charged the two companies for selling unregistered securities through Gemini Earn.
It was not clear whether the initial agreement with Genesiss main creditors included Gemini. The Winklevoss company did not immediately respond to a request for comment when contacted by Fortune.
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