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Crypto Lender Genesis Files For Chapter 11 Bankruptcy appeared on bitcoinmagazine.com by BtcCasey.
Genesis’s two lending subsidiaries, Genesis Global Capital and Genesis Asia Pacific, have filed for Chapter 11 bankruptcy.
According to the announcement, the firm aims to enact “a global resolution to maximize value for all clients and stakeholders and strengthen its business for the future.”
In November 2022, Genesis Global Capital halted their operations, freezing withdrawals amidst a liquidity crisis that came as a result of the implosion of the FTX cryptocurrency exchange. The lending arm was FTX’s largest unsecured lender, with claims amounting to more than $226 million.
Bitcoin Magazine PRO described how the firm needed a liquidity injection of at least $1 billion dollars in order to save itself — but this did not happen. In January 2023, Genesis’ parent company, Digital Currency Group, was accused by Gemini President Cameron Winklevoss of using Genesis in an elaborate high-yield scheme which transferred the high-risk of these yield generating investments to Gemini’s Earn product users. Gemini Earn was earning this yield via Genesis, which, according to the statements made by Winklevoss, Gemini believed to be a reputable counterparty.
“Genesis has proposed a roadmap to an exit including a Chapter 11 plan that calls for a framework for a global resolution of all claims through, and the creation of, a trust that will distribute assets to creditors,” the filing describes. “All aspects of the restructuring process will be overseen by an independent special committee of the company’s board of directors.”
Genesis’ Interim CEO, Derar Islim, stated that “While we have made significant progress refining our business plans to remedy liquidity issues caused by the recent extraordinary challenges in our industry, including the default of Three Arrows Capital and the bankruptcy of FTX, an in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all Genesis stakeholders.”
According to the filing, Genesis has more than $150 million cash on hand, “which will provide ample liquidity to support its ongoing business operations and facilitate the restructuring process.”
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