Two of Genesis’ lending subsidiaries, Genesis Global Capital and Genesis Asia Pacific, have filed for Chapter 11 bankruptcy.
According to the announcement, the company is aiming for “a global resolution to maximize value for all clients and stakeholders and strengthen the business for the future.”
In November 2022, Genesis Global Capital ceased operations, freezing withdrawals in the midst of a liquidity crisis caused by the implosion of the FTX cryptocurrency exchange. That arm is FTX’s largest unsecured lender, with more than $226 million in claims.
Bitcoin Magazine PRO explained how the firm needed a liquidity injection of at least $1 billion dollars to save itself – but this did not happen. In January 2023, Genesis’ parent company, Digital Currency Group, was accused by Gemini President Cameron Winklevoss of using Genesis in a high-yield scheme that transferred the high risk of high-yield investments to users of Gemini Earn products. Gemini Earn achieved this result through Genesis, which, according to a statement made by Winklevoss, Gemini believed to be a reputable partner.
“Genesis has proposed a roadmap to exit including a Chapter 11 plan that calls for a framework for the global resolution of all claims through, and the creation of, a trust that will distribute assets to creditors,” the filing describes. “All aspects of the restructuring process will be overseen by a special committee independent of the company’s board of directors.”
Interim CEO of Genesis, Derar Islam, stated that “While we have made significant progress in refining our business plan to overcome the liquidity problems caused by the extraordinary challenges in our industry, including the default of Three Arrows Capital and the bankruptcy of FTX, and -Court restructuring provides a way which is most effective in safeguarding assets and creating the best results for all Genesis stakeholders.
According to the filing, Genesis has more than $150 million in cash, “which will provide sufficient liquidity to support ongoing business operations and facilitate the restructuring process.”