Genesis’s two lending subsidiaries, Genesis Global Capital and Genesis Asia Pacific, have filed for Chapter 11 bankruptcy.
According to announcementthe company aims to adopt “a global resolve aimed at maximizing value for all customers and stakeholders and strengthening its business for the future”.
In November 2022, Genesis Global Capital halted operations, freezing withdrawals amid a liquidity crunch stemming from the FTX implosion cryptocurrency exchange. The lending arm was FTX’s largest unsecured lender, with claims amounting to over $226 million.
Bitcoin Magazine PRO describes how the company needed a cash injection of at least $1 billion to bail itself out – but it didn’t happen. In January 2023, Genesis’ parent company, Digital Currency Group, was accused by President Gemini Cameron Winklevoss to use Genesis in an elaborate high-return scheme that transferred the high risk of these return-generating investments to users of Gemini’s Earn products. Gemini Earn was earning this return through Genesis, which Winklevoss said Gemini believed to be a reputable counterparty.
“Genesis has proposed a roadmap to an exit that includes a Chapter 11 plan that calls for a framework for a comprehensive resolution of all claims through and the creation of a trust that will distribute assets to creditors,” describes the case. “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 said that “While we have made significant progress in refining our business plans to address liquidity issues caused by recent extraordinary challenges in our industry, including the Failure of Three Arrows Capital and the bankruptcy of FTX, one-court restructuring presents the most effective way 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 sufficient liquidity to support its ongoing business operations and facilitate the restructuring process.”
