Three Arrows Capital Demands to Take Part in Genesis Bankruptcy Mediation

Defunct crypto hedge fund Three Arrows Capital (3AC) has demanded to be included in the bankruptcy mediation process of crypto lender Genesis Global, according to a Sunday filing.

On May 1, Judge Sean Lane appointed Randall J. Newsome to mediate talks about the contribution Genesis owner Digital Currency Group (DCG) should make to any restructuring plan. DCG is also CoinDesk’s parent company.

30 days later, Genesis sought to expand Newsome’s mandate by a further two weeks. That has prompted a belated response from 3AC, the crypto hedge fund whose dramatic collapse in 2022 heralded the current crypto winter, and which has asserted claims of over $1 billion for transfers made to Genesis prior to bankruptcy.

“[Genesis’] mediation and plan negotiation efforts will be unable to address consensually the claims of all stakeholders and thereby maximize the value of the Debtors’ estates without the participation of the [3AC] Joint Liquidators,” according to the filing made by Russell Crumpler and Christopher Farmer, appointed to represent the 3AC wind-up in the British Virgin Islands.

In March, 3AC reached an interim deal to limit Genesis’ ability to transfer stocks and cryptocurrency while claims are settled, but Crumpler and Farmer now say they haven’t been sufficiently involved in Genesis talks despite being one of the biggest creditors.

The proposal to extend mediation is set to be discussed at a hearing in the Southern District of New York on Monday. It has also been objected to by a range of individual users of the Gemini Earn program, seeking to speed up the return of their funds.

On Jan. 20, the three affiliated companies Genesis Global Holdco LLC, Genesis Asia Pacific Pte. Ltd and Genesis Global Capital LLC filed for bankruptcy. At the time, DCG said it owed Genesis Capital $526 million, due in May 2023, plus $1.1 billion under a promissory note due in June 2032.

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