The lending arm of crypto institutional brokerage Genesis and its associated debtors petitioned the court for a mediator on Monday, complicating a bankruptcy case that seemed to be well on its way to resolution two months earlier.
In the motion, lawyers for Genesis said that a mediator was needed to resolve "one of the most important issues in these Chapter 11 proceedings: the amount, form, timing and other terms and conditions of DCG’s contribution to the Debtors’ reorganization plan."
Genesis reportedly owes its main creditors approximately $2.4 billion, according to a report from CoinDesk, out of the approximately $3.4 billion in liabilities the company cited in its bankruptcy filing. In February, Genesis's main creditors and parent company Digital Currency Group, which is run by crypto billionaire Barry Silbert, agreed to an initial restructuring plan.
"More than two months after all parties agreed to a comprehensive settlement that was submitted by Genesis Capital to the Bankruptcy Court, a group of Genesis Capital’s creditors have reneged and raised all new demands," DCG said in a statement Tuesday morning.
DCG Statement on Genesis filing Motion for Mediation: pic.twitter.com/pRluUnL49C
— Digital Currency Group (@DCGco) April 25, 2023
Genesis's committee for unsecured creditors—the legal entity that represents hundreds of thousands who had funds stored on the lending arm for Genesis—did not immediately respond to a request for comment when contacted by Fortune.
As a slew of crypto companies declared bankruptcy over the past year, most infamously the exchange FTX, Genesis suddenly found itself in deep water. It laid off 30% of its staff, and its lending unit, Genesis Global Capital, suspended customer withdrawals in November.
This brought it into direct conflict with Gemini, a crypto exchange run by Cameron and Tyler Winklevoss, who are most famous for their role in the founding of Facebook. Genesis and Gemini had previously partnered on a yield-bearing product, Gemini Earn. Customers using the product had funds stored in Genesis, which they suddenly couldn't withdraw.
In January, the lending arm of Genesis filed for bankruptcy, and Gemini became one of its main creditors. One month later, the bankruptcy case seemed to be on its way to being resolved, as main creditors for the lending arm agreed to sell off the bankrupt entities of Genesis, specifically its lending arm and crypto-trading business.
The deal also included winding down the Genesis loan book as well as refinancing a $100 million loan in Bitcoin and a $500 million loan in cash that DCG borrowed from the struggling crypto brokerage.
A spokesperson for Gemini did not immediately respond to a request for comment.
