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Home » Genesis Crypto Lending Firm Applied For Chapter 11 Bankruptcy

Genesis Crypto Lending Firm Applied For Chapter 11 Bankruptcy

Hania by Hania
January 20, 2023
in Altcoin News, Bitcoin News, Crypto Exchanges, General News
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Genesis to Repay $3 Billion to Creditors After Bankruptcy Approval
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Genesis Global, a crypto lender, has applied for Chapter 11 bankruptcy protection in New York, becoming the newest company to file for bankruptcy in the wake of FTX’s collapse.

In the Southern District of New York, cryptocurrency lender Genesis has filed for Chapter 11 bankruptcy.

According to the Jan. 19 filing, the firm’s estimated liabilities range from $1 billion to $10 billion and its assets are in a similar range.

Previous reports stated that if the company was unable to raise money to resolve its liquidity crisis, it would consider filing for bankruptcy protection.

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Genesis stated in a press release dated Jan. 19 that it has been in talks with its advisors “to its creditors and corporate parent Digital Currency Group (DCG) to explore the most efficient approach to preserve assets and take the business forward.”

Genesis has now started a restructuring procedure under court supervision to pursue these negotiations.

Genesis Crypto Lending Firm Applied For Chapter 11 Bankruptcy

In its Chapter 11 plan, the company states that it is considering a “dual track process” in which it will pursue a “sale, capital raise, and/or an equitization transaction,” which would supposedly allow the company “to emerge under new ownership.”

Genesis’s broker-dealer, custody, spot trading, and derivatives businesses are not involved in the Chapter 11 proceedings and will continue to operate, according to the company.

Additionally, it stated that it has cash on hand totalling more than $150 million, which it believed “would provide adequate liquidity to maintain its ongoing business activities and facilitate the restructuring process.”

An “independent special committee” of the company’s board of directors will supervise the restructuring process, according to Genesis, which aims to deliver “an optimal outcome for Genesis clients and Gemini Earn users.”

Genesis Crypto Lending Firm Applied For Chapter 11 Bankruptcy

In November 2022, the company stopped allowing withdrawals from its platform due to market turmoil caused by FTX’s collapse. Users of Gemini Earn, a yield-bearing product for users of the Gemini cryptocurrency exchange run by Genesis, were impacted by the change.

Although the bankruptcy is a “crucial step” toward allowing Gemini users to reclaim their possessions, Gemini co-founder Cameron Winklevoss said DCG and its CEO Barry Silbert “continue to refuse to offer creditors a fair deal” and vowed to file a lawsuit “until Barry and DCG come to their senses.”

4/ Crucially, the decision to put Genesis into bankruptcy does not insulate Barry, DCG, and any other wrongdoers from accountability.

— Cameron Winklevoss (@cameron) January 20, 2023

6/ We will soon file a lawsuit against Barry and DCG if they don’t change their ways and provide a reasonable offer to creditors.

(@cameron) Cameron Winklevoss 20 January 2023

The Securities and Exchange Commission (SEC) of the United States is bringing accusations against Genesis and Gemini for allegedly marketing unregistered securities through the Earn program.

The parent firm of Genesis, DCG, is raising concerns as it may need to sell some of its $500 million venture capital portfolios in order to try and cover Genesis’ liabilities.

DCG stopped paying dividends on January 17 in an effort to “reduce operating expenses and preserve liquidity.” Additionally, it is said that DCG is considering selling its crypto media company CoinDesk, which might bring approximately $200 million.

Tags: Chapter 11 planCoin DeskDCGGemini
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Hania

Hania

Hania is a 30-year-old blogger who used to be a teacher before entering the world of writing. She is originally from India and has been writing blogs on various topics for 2 years now. Hania is particularly interested in exploring the intersections of finance, technology, and cryptocurrency. Her experience as a teacher has given her unique insights into the ways in which digital media can be used to facilitate learning and engagement. Through her writing, Hania hopes to share her knowledge and learning of crypto industry with everyone.

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