At a bankruptcy hearing on Monday, U.S. Bankruptcy Court Judge Sean Lane granted an extension to the mediation period between crypto lender Genesis and its creditors. The decision came as tensions escalated regarding the involvement of Genesis’ parent company, Digital Currency Group (DCG), in the lender’s restructuring process.
The previously scheduled mediation period, originally set to end last month, has been extended until June 16. On May 1, Judge Lane appointed a mediator to facilitate discussions between the insolvent lender and its creditors after prior negotiations between the parties had failed earlier this year.
During the hearing, Judge Lane expressed the complexity of the conversations involved in bankruptcies, stating, “There are various types of discussions that need to take place in relation to [bankruptcies].” He further acknowledged the inherent challenge of negotiating all aspects simultaneously, emphasizing that comprehensive negotiations can be a demanding task.
The decision by the judge to extend the mediation period drew frustration from certain Genesis creditors, including crypto exchange Gemini, who was previously a business partner of the lender. Genesis had filed for bankruptcy in January in the Southern District of New York.
Anson Frelinghuysen, a partner at Hughes Hubbard & Reed representing Gemini, emphasized the significance of considering the individuals affected by each delay, stating, “Gemini urges all parties involved to bear in mind that every delay directly impacts real people who are separated from their investments.
He further expressed concerns about the patience of Gemini, as well as its users of the Earn product, reaching a threshold. It’s worth noting that centralized cryptocurrency exchange Gemini had halted withdrawals from accounts associated with its crypto lending service, Gemini Earn, in November.
This action was taken after Genesis suspended its operations due to the collapse of one of its borrowers, the crypto exchange FTX, which involved billions of dollars.
During the hearing, Gemini Earn customers, who have been adversely affected by Genesis’ financial difficulties, voiced their dissatisfaction with the judge’s choice to extend the mediation period of the case.
While acknowledging the challenges faced by Genesis’ creditors, Judge Lane countered their assumptions that the mediation process’s timeline would unnecessarily prolong the court proceedings.
FTX claims that Genesis owes them $3.9 billion. Instead, Judge Lane granted additional time for the case’s parties to develop a revised proposal that would outline the distribution of funds to the numerous creditors of Genesis, which amount to hundreds of thousands of individuals.
Genesis, on its part, asserts that it does not have any outstanding debts to FTX. The lender has formally requested the judge overseeing the case to determine the precise amount that FTX claims to be owed.