A lawyer for bankrupt cryptocurrency lender Genesis is optimistic the company can resolve its creditor disputes as early as this week and the company could emerge from Chapter 11 by the end of May.
Genesis attorney Sean O’Neal made the comments at an initial hearing Jan. 23 in the U.S. Bankruptcy Court for the Southern District of New York, according to Reuters. message.
He added that Genesis had “a certain amount of confidence” that it would resolve disputes with creditors by the end of the week and seek a judge to appoint a mediator if necessary, but said:
“As I sit here now, I don’t think we’ll need a mediator. I’m very optimistic.”
Genesis filed for Chapter 11 bankruptcy January 19. At the time, it already had a restructuring plan, along with a “sale, capital increase and/or equity transaction” route, so it could potentially “emerge under new ownership”.
The bankruptcy comes nearly two months after Genesis suspended withdrawals in November 2022 due to market turbulence caused by the bankruptcy of crypto exchange FTX.
Genesis’ Judge Sean Lane allowed a series of “day one” motions, standard in bankruptcy proceedings, that included allowing the firm to pay employees and vendors.
Lane added that Genesis was not required to disclose the names of customers on its creditor list, citing privacy concerns. Lane even suggested that the lender warn users about possible phishing scams if the names are later released.
Genesis said it will sell its assets at auction with plans to exit bankruptcy in less than four months on May 19.
It reported having assets and liabilities of just over $5 billion and owed more than 100,000 creditors at least $3.4 billion. Genesis download suspension last year affected users an income-bearing product that it managed called “Earn” from the Gemini Exchange.
Gemini is Genesis’ largest creditor, owing nearly $766 million.
Its largest creditor was its parent company Digital Currency Group (DCG), which owes Genesis about $1.65 billion, including $575 million in loans due in May and a $1.1 note due in 10 years.
Although DCG is facing financial problems of their own — audition did not include DCG. Likewise, Genesis entities handling derivatives, spot trading, broker-dealer and custody are not part of the management and continue to operate under Genesis.