Crypto lender Genesis, a subsidiary of Digital Currency Group (DCG), has filed for Chapter 11 bankruptcy. The filing followed a lawsuit filed by the US Securities and Exchange Commission (SEC). Genesis claims to have “ample liquidity to support its ongoing business operations and facilitate the restructuring process.”
Genesis Bankruptcy Filing
Genesis Global Holdco LLC, a primary brokerage subsidiary of venture capital firm Digital Currency Group (DCG), announced Friday that it has filed for voluntary Chapter 11 bankruptcy in the US Bankruptcy Court for the Southern District. from New York.
The company’s two lending business subsidiaries, Genesis Global Capital LLC and Genesis Asia Pacific Pte. Ltd., are part of the bankruptcy filing, while “other subsidiaries involved in the custody and spot and derivatives trading businesses and Genesis Global Trading are not included in the presentation and are continuing the business operations of clients,” the announcement clarifies.
“As part of its Chapter 11 filing, Genesis has proposed a roadmap for an exit that includes a Chapter 11 plan,” the company detailed, adding:
The plan contemplates a two-way process in search of a sale, capital increase and/or equity transaction that would allow the business to emerge under new ownership.
Derar Islim, interim CEO of Genesis, explained that before filing for bankruptcy, the company has been trying to “remediate liquidity problems,” including those caused by the default of cryptocurrency hedge fund Three Arrows Capital (3AC). ) and the collapse of the cryptocurrency exchange. FTX. Islam was appointed to his post last August.
Genesis claims to have more than $150 million in cash on hand that will “provide ample liquidity to support its ongoing business operations and facilitate the restructuring process.” The company has filed motions with the bankruptcy court “to allow daily operations to continue in the normal course.” The ad adds:
Redemptions and new loan origination in the lending business remain suspended, and claims will be addressed through the Chapter 11 process.
Gemini Earn Investor Refund
With a court-supervised restructuring process underway, Genesis explained that it plans to advance talks with its creditors and parent company DCG in the hope of reaching “a holistic solution for its lending business that, if achieved, would provide an optimal outcome for Genesis customers. and Gemini Earn users.”
Genesis and the Gemini cryptocurrency exchange have been in a dispute over Gemini’s cryptocurrency lending program, Earn. Genesis froze withdrawals last November while holding roughly $900 million in investor assets from more than 340,000 Gemini Earn investors.
Gemini co-founder Cameron Winklevoss said on Twitter Friday that Genesis’ bankruptcy filing “is a crucial step” for Earn clients to recover their assets. However, he noted, “Crucially, the decision to bankrupt Genesis does not insulate Barry (Silbert), DCG and any other wrongdoers from liability,” explaining:
We have been preparing to take direct legal action against Barry, DCG, and others who share responsibility for the fraud that has harmed the 340,000+ Earn users and others misled by Genesis and its accomplices.
“Unless Barry and DCG come to their senses and make a fair offer to creditors, we will be filing a lawsuit against Barry and DCG imminently. We also believe that in addition to returning all the money to the creditors, Genesis, DCG and Barry owe them an explanation. The bankruptcy court provides a much-needed forum for that to happen,” the Gemini co-founder concluded.
Last week, the US Securities and Exchange Commission (SEC) indicted both Gemini and Genesis Global Capital “for the unregistered offering and sale of securities to retail investors through the Gemini crypto asset lending program.” Earn”.
What do you think about the Genesis bankruptcy filing? Let us know in the comments section.
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