(Bloomberg) -- The squabble between crypto billionaires Cameron and Tyler Winklevoss and Digital Currency Group’s Barry Silbert appears to be over, paving the way for a resolution of one of the industry’s biggest bankruptcies. 

An emerging accord may end a months-long impasse that boiled over into a public spat and left 340,000 of the twins’ Gemini Trust Co. customers in limbo.

DCG and creditors representing $2 billion worth of claims against its bankrupt Genesis lending division, including Gemini, reached agreement on a plan that includes DCG restructuring some $1.7 billion of its debt and other obligations owed to Genesis. DCG would also contribute equity interest in another unit, Genesis Global Trading, to the bankrupt lending arm. 

Gemini — which partnered with Genesis on a high-yield product called Earn — will kick in up to $100 million and distribute the value of certain collateral it previously received from Genesis to Earn customers.

“We’ve used our time extremely well over the last two weeks,” said Sean O’Neil, a lawyer for the debtors, during a hearing Monday at which the agreement was unveiled. The deal still needs to be approved by the bankruptcy judge overseeing the case.

Genesis Global Holdco filed for bankruptcy last month, becoming the latest firm to succumb to the contagion caused by crypto exchange FTX’s collapse. The lender had suspended withdrawals in November, soon after FTX went bankrupt, a move that resulted in Earn users being unable to access hundreds of millions of dollars worth of their crypto. 

The ensuing standstill stoked an escalating spat. The Winklevoss twins alleged misrepresentations by Silbert and called for his removal as CEO.

Different Tone

On Monday, Cameron Winklevoss struck a different tone, hailing an agreement that “provides a path for Earn users to recover their assets.” 

For its part, DCG through a spokesperson said it “actively engaged with Genesis and its creditors to reach a fair and equitable resolution. We are pleased to help Genesis reach this agreement with all the creditors that opted to participate in the process.”

The Earn program had offered investors the potential to generate as much as 8% in interest on their digital coins through an arrangement under which it lent them out to Genesis. The Securities and Exchange Commission said in mid-January that it was suing the two parties for breaking securities rules.

Genesis said in January that it was aiming for a relatively quick exit from bankruptcy court. It had entered court protection with a restructuring plan already drawn up and filings at the time showed it hoped to implement it no later than May 19. Such a timeline would amount to a much quicker process than had been seen by other crypto firms that collapsed, including Voyager Digital and Celsius Network.

Genesis’s Chapter 11 filing revealed that it owed its top 50 creditors more than $3 billion, including seven creditors owed at least $100 million. The biggest claim by far was $766 million related to Gemini Earn customers.

The debt restructuring announced Monday calls for DCG to refinance its almost $600 million in loans owed to Genesis this year with a new second-lien term loan facility consisting of two tranches, one denominated in dollars, the other in Bitcoin. The facility, roughly equal to $500 million, will mature in June 2024. 

To satisfy $1.1 billion promissory note to Genesis owed by DCG, the parent company will issue convertible preferred stock that will convert into common equity in DCG, or potentially another agreed-upon subsidiary of DCG. Negotiations are ongoing, a lawyer for Genesis said.

“This deal simplifies the situation, and makes it likely more value will be salvaged,” said Aaron Brown, a crypto investor who writes for Bloomberg Opinion. “But the real problem is the value of the assets is much smaller than the value of the liabilities, and this doesn’t change that. It merely simplifies the process of recognizing losses, distributing the remaining value and the surviving parties getting on with their lives. There will still be plenty of lawsuits.”

The settlement only relates to a portion of creditors. Many details of the deal remain unclear, said Campbell Harvey, a finance professor at Duke University. It’s in everyone’s interest to come to a resolution quickly, he added.

“DCG has many other businesses and the Genesis bankruptcy is a huge distraction,” Harvey said. “It is in their interest to resolve uncertainty as soon as possible because the Genesis bankruptcy is a cloud hanging over all of their businesses.”

The case is Genesis Global Holdco LLC, 23-10063, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

(Updates with comments on accord from the third-to-last paragraph)

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