3 - 4 minute read
U.S. Bankruptcy Court Judge Sean Lane has extended the mediation period between crypto lender Genesis and its creditors until June 16th. The mediator was appointed to steer talks between the insolvent lender and its creditors on May 1st after previous discussions broke down earlier this year. Genesis filed for bankruptcy in January in the Southern District of New York. The extension of the mediation period has frustrated some of Genesis’ creditors, including the lender’s former business partner, crypto exchange Gemini.
During the hearing, tensions flared over the role Genesis’ parent company Digital Currency Group (DCG) would play in the lender’s restructuring. Digital Currency Group is the parent company of CoinDesk. Legal representatives for Gemini argued that prolonging talks between the case’s players could inflict greater financial harm on those most impacted by the bankruptcy. Centralized cryptocurrency exchange Gemini froze withdrawals from accounts tied to its crypto lending product Gemini Earn last November after Genesis shuttered its operations following the multi-billion dollar collapse of one of its borrowers, crypto exchange FTX.
While sympathetic to the troubles of Genesis’ creditors, Judge Lane challenged their assumptions that the timeline of the mediation process would drag out the court’s proceedings. The judge also shot down requests to open the settlement talks to bankrupt crypto exchange FTX, which alleges Genesis owes it $3.9 billion. He instead gave the case’s parties more time to formulate a revised proposal that would guide payouts to hundreds of thousands of Genesis creditors. Genesis, for its part, alleges it does not owe FTX any money at all. The lender has requested the case’s judge estimate the exact amount FTX is owed, which will be considered at next week’s hearing.
The bankruptcy hearing has significant implications for the crypto market. The collapse of Genesis has impacted numerous crypto investors and exchanges, including Gemini, which has frozen withdrawals from accounts tied to its crypto lending product Gemini Earn. The mediator appointed to steer talks between Genesis and its creditors will play a crucial role in determining the future of the lender and the wider crypto market.
The Bottom Line
The extension of the mediation period between crypto lender Genesis and its creditors has frustrated some of Genesis’ creditors, including the lender’s former business partner, crypto exchange Gemini. Traders should pay close attention to the ongoing bankruptcy proceedings and the mediator’s role in steering talks between Genesis and its creditors. The case has significant implications for the wider crypto market, particularly on other lenders and exchanges.
