After weeks of standoffs with customers and regulators, the lending arm of crypto firm Genesis filed for Chapter 11 bankruptcy last Thursday night.
Genesis, which is part of Barry Silbert’s Digital Currency Group, serves the web of top crypto companies, with court filings that reveal billions of dollars owed to creditors, which could send more shock waves through the attacked sector.
In a press release on Friday, Derar Islam, interim CEO of Genesis, said that the company has been working to fix the liquidity problem caused by its exposure to the collapse of the hedge fund Three Arrows Capital and FTX.
“Restructuring provides the most effective way to preserve assets and create the best results for all Genesis stakeholders,” Islim said.
Gemini, the crypto company run by the Winklevoss twins, is Genesis’ top client, due to a growing conflict on Twitter in January. According to the bankruptcy filing, Genesis owes Gemini—and by extension retail customers who use Gemini’s Earn products—more than $750 million, making it the company’s top creditor.
Gemini is just the tip of the iceberg for Genesis, which has the largest debt of $3.4 billion. FTX, in contrast, owes its 50 largest unsecured creditors $3.1 billion.
Other names on Gemini’s list of creditors include a who’s who of crypto companies and trading companies. The second largest creditor is Mirana, the venture arm of crypto exchange ByBit. In a tweet on Friday morning, ByBit CEO Ben Zhou said that Mirana only manages some of ByBit’s assets and that the exposure will not affect client funds, including the exchange’s “earned” products.
ByBit customers are the same not satisfied with an explanation, demanding more answers about how the product obtained ByBit manages and from where it produces. Earnings from the products obtained by Gemini, after all, is made by sending customer funds to Genesis, which is a loan of money to institutional investors.
Another major creditor is Heliva International Corp, which lists the CFO for the Decentraland metaverse platform as its point of contact. When contacted by CoinDesk, Decentraland denied that the funds in Genesis were official investments from Decentraland.
Also on the list is the Stellar Development Foundation, a non-profit for the Stellar blockchain, which focuses on financial inclusion applications like remittance payments. Steller did not immediately respond to a request for comment.
Genesis is just a subsidiary of the Digital Currency Group empire, which includes digital asset manager Grayscale, as well as CoinDesk. While the fate of other companies is unknown, the The Wall Street Journal It was reported that CoinDesk is exploring a possible sale.
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