Genesis Global, a cryptocurrency lender, has filed for Chapter 11 bankruptcy protection in New York, becoming the latest company to throw in the towel after the collapse of FTX.
Genesis, a lender of cryptocurrencies, has filed for Chapter 11 bankruptcy in the Southern District of New York.
According to the January 19 filing, the company’s estimated liabilities vary from $1 billion to $10 billion, and its assets fall within the same range.
Earlier reports suggested that the firm was contemplating filing for bankruptcy if it was unable to secure sufficient funds to alleviate its liquidity issue.
In a news statement dated January 19, Genesis said that it has been in conversations with its advisers “to its creditors and corporate parent Digital Currency Group (DCG) to explore the best way to preserve assets and advance the company.
The firm’s derivatives, spot trading, broker-dealer, and custody activities are not included in the Chapter 11 proceedings and will continue to operate.
In addition, it claimed to have more than $150 million in cash on hand, which “would provide adequate liquidity to fund its continued business activities and aid the restructuring process.”
The restructuring process will be managed by an “independent special committee” of the company’s board of directors, and according to Genesis, the process is intended to provide “the best possible conclusion for Genesis customers and Gemini Earn users.”
In November 2022, the company banned withdrawals from its platform due to market volatility induced by the demise of FTX. The change affected consumers of Gemini Earn, a yield-generating program for users of the Genesis-managed Gemini crypto exchange.
Cameron Winklevoss, a co-founder of Gemini, tweeted that the bankruptcy is a “crucial step” toward Gemini users recovering their assets. However, he claimed DCG and its CEO Barry Silbert “continue to refuse to offer creditors a fair deal” and threatened to sue “unless Barry and DCG come to their senses.”
The United States Securities and Exchange Commission (SEC) has filed accusations against both Genesis and Gemini for allegedly marketing unregistered securities via the Earn program.
DCG, the parent firm of Genesis, is becoming more concerned that it may have to sell a portion of its $500 million venture capital portfolio to balance Genesis’ obligations.
On January 17, DCG suspended dividend payments in an effort to preserve capital “lowering operational costs and maintaining liquidity.” Reportedly, DCG is weighing the sale of its crypto media portal CoinDesk, which could generate $200 million.