Home CryptocurrencyAltcoin Crypto lender Genesis files for Chapter 11 bankruptcy

Crypto lender Genesis files for Chapter 11 bankruptcy

by SuperiorInvest

Cryptocurrency lender Genesis has filed for Chapter 11 bankruptcy in the Southern District of New York.

The company estimates liabilities of $1 billion to $10 billion and assets in the same range, according to a Jan. 19 filing.

Earlier reports claimed that the company was considering filing bankruptcy protection unless it was able to raise capital to stop the liquidity crisis.

In a Jan. 19 Genesis press release he said has engaged in discussions with its advisers “with its lenders and parent company Digital Currency Group (DCG) to evaluate the most effective way to preserve assets and move the business forward.”

“Genesis has now commenced a court-supervised restructuring process to further advance these discussions.”

The company’s Chapter 11 plan contemplates a “two-track process” following a “sale, capital increase and/or equity transaction” that would apparently allow the business to “emerge under new ownership.”

Genesis’ derivatives, spot trading, broker-dealer and custody businesses are not part of the Chapter 11 proceedings and will continue to operate, according to the firm.

The company also said it has more than $150 million in cash on hand, which it believes will “provide sufficient liquidity to support its ongoing business operations and facilitate the restructuring process.”

The restructuring process will be led by an “independent special committee” of the company’s board, and Genesis says the process is aimed at providing “an optimal outcome for Genesis clients and Gemini Earn users.”

The firm suspended withdrawals from its platform in November 2022 amid market turmoil caused by the FTX collapse. The move hit users of Gemini Earn, an income product for users of the Gemini cryptocurrency exchange managed by Genesis.

Related: Gemini and Genesis’ legal woes continue to rock the industry

Gemini co-founder Cameron Winklevoss tweeted that the bankruptcy was a “crucial step” in helping Gemini users recover their assets, but claimed DCG and its CEO Barry Silbert “continue to refuse to offer creditors a fair deal” and threatened legal action. unless Barry and DCG come to their senses.”

Both Genesis and Gemini are faces charges by the United States Securities and Exchange Commission (SEC) for allegedly offering unregistered securities through the Earn program.

Concerns abound about parent company Genesis DCG may have to sell part of its $500 million venture capital portfolio to try to offset Genesis’ liabilities.

On 17 January, DCG stopped paying dividends as part of a move aimed at “reducing operating costs and maintaining liquidity”. The selling your cryptographic medium CoinDesk is also reportedly under consideration, which could net DCG $200 million.

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