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