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.
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.
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.”
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.