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Crypto Lender Genesis Files for Bankruptcy

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Genesis Global Capital and Genesis Asia Pacific, two of Genesis’ lending companies, have both filed for Chapter 11 bankruptcy.

According to their announcement, the firm intends to implement a global resolution in order to maximize value for all clients and stakeholders while strengthening its business for the future.

Genesis Global Capital halted operations in November 2022 and froze withdrawals amid a liquidity crisis brought on by the collapse of the FTX cryptocurrency exchange. The lending arm was FTX’s largest unsecured lender and had claims totaling more than $226 million.

Gemini’s president Cameron Winklevoss accused Genesis’ parent business, Digital Currency Group, of using Genesis in a complex high-yield scheme that shifted the substantial risk of these yield-generating investments to Gemini’s Earn product users. According to Winklevoss’ comments, Gemini Earn received this yield from Genesis, which Gemini perceived to be a trustworthy counterparty.

The filing states that “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.”

It was also noted that an independent special committee of the company’s board of directors will be in charge of overseeing every step of the restructuring process.

Genesis’ Interim CEO Derar Islim explains:
 

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 announcement, Genesis has more than $150 million in cash on hand, which will provide the company with liquidity to sustain its ongoing operations and optimize the restructuring process.

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Deniz Saat is an IT services specialist, technical writer and editor for BTC Times. His mission is to onboard as many people as possible into the Bitcoin overlay through education and content creation.

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