According to a report from TheBlock, Digital Currency Group (DCG) and crypto exchange Gemini have reached an agreement after months of negotiations, following the collapse of crypto lender Genesis, a DCG subsidiary, and the Gemini Earn program. The event left thousands of users without funds, causing several lawsuits and the deterioration of the relationship between the two companies.
The proposed agreement aims to compensate clients by offering them a 70-90% recovery with a portion of the recovery in digital currencies. Moreover, if the price of Bitcoin and Ethereum rise to $85,000 for BTC and $8,500 for ETH respectively, users will still receive an equivalent amount. This is a remarkable outcome for any liquidating chapter 11 case, especially in the volatile cryptocurrency industry.
The report also claims that DCG will provide a $630 million loan to assist its subsidiary, to be repaid in cash and via a financial instrument to be settled by 2025. Additionally, as collateral for the debt owed to Gemini’s clients, Genesis posted 60% of this amount as shares for the Grayscale Bitcoin Trust.
The possibility of the US Securities and Exchange Commission (SEC) allowing the GBTC to convert into an exchange-traded fund has positively impacted its value, reducing the discount between the GBTC and the spot price for Bitcoin. This could provide further relief for Gemini Earn users.
At the time of writing, Bitcoin is trading at $26,100 and has been moving sideways in the last few days. The agreement still needs to be voted by creditors, and the clause related to the potential crypto bull run aims to incentivize them to vote in favor.