Genesis Seeks Extra Time To File Bankruptcy Exit Plan As DCG Defaults On $630M Payment

Genesis, the now bankrupt cryptocurrency lender, has filed a motion in court seeking an extension on the debtors' exclusive period as its parent company, Digital Currency Group (DCG), defaulted on the $630 payment that was due last week.

Genesis' legal team filed a request in the United States Bankruptcy Court of the Southern District of New York for an extension of its time to file a Chapter 11 plan and solicit acceptance, which it said is crucial "to achieve a value-maximizing restructuring without the interruption of a competing plan."

The major reasons pointed out by the bankrupt crypto lender include the size and complexity of its case, as billions of dollars in assets and liabilities are to be restructured.

Genesis also underlined that the court should consider the ever-evolving regulatory climate in the cryptocurrency space as a factor for granting the company the requested extension.

"The nature of the debtors' business, the current market conditions in the digital asset space and the sheer size and breadth of the debtors' assets and liabilities present a number of complexities that must be considered as part of the debtors' negotiation and formulation of the plan," Genesis explained.

Furthermore, the bankrupt crypto lender said it had made "good faith progress" toward exiting bankruptcy and that the proposed extension would "neither prejudice nor pressure creditors or any interested parties."

Genesis also told the court that continued exclusivity will allow the crypto lender to "avoid the disruptions that would result from the development of competing plans and will benefit the debtors' estates, their creditors and all other parties-in-interest. In addition, should a change in circumstances result in a creditor being pressured after the exclusive periods are extended, the creditor may move as a party in interest to terminate the debtors' exclusive periods."

It also assured granting an extension "will not harm the creditors in these Chapter 11 cases."

Genesis will have until Aug. 27 to file a plan if the court approves its motion and crypto exchange Gemini will have until Oct. 26 to accept the plan.

Last week, cryptocurrency exchange Gemini revealed that DCG missed out on the $630 million payment to Genesis. In April, Gemini warned that DCG would be at risk of defaulting on its obligations should it fail to make the required payment.

In the latest update on its official website, Gemini shared it was working with creditors and evaluating the potential of granting forbearance to the digital assets conglomerate as a way to prevent a default.

"Digital Currency Group, Inc. (DCG), the parent company of Genesis Global Capital, LLC (Genesis) did not pay the approximately $630 million that came due last week. Genesis, the Unsecured Creditors Committee (UCC), the Ad Hoc Group of Creditors (AHG), and Gemini are considering whether to provide a forbearance to DCG to avoid a DCG default. Consideration will be based in part on whether the parties believe DCG will engage in good faith negotiations on a consensual deal," the Winklevoss twins-led exchange said in an update.

"DCG continues to be engaged with the various stakeholders in the Genesis Capital restructuring process pursuant to the 30-day mediation period entered into by all parties on May 1," a DCG spokesperson disclosed.

Genesis filed for Chapter 11 bankruptcy in January. The crypto lender owes more than $3.5 billion to its list of creditors, which included Gemini, Mirana, Moon Alpha Finance, Cumberland and VanEck's New Finance Income Fund.

In January, the U.S. Securities and Exchange Commission (SEC) accused both Genesis and Gemini of "unregistered offer and sale of crypto asset securities through the Gemini Earn lending program."