Crypto lending firm Genesis files for bankruptcy after suffering irreparable damage from the collapse of FTX and Three Arrows Capital. The firm is part of the Digital Currency Group owned by Barry Silbert. They have been facing a lot of problems recently, and the bankruptcy was a result of the same. Genesis has also been facing lawsuits from its clients.
The bankruptcy filing of Genesis
The FTX collapse has crippled many companies, and Genesis is one of them. Crypto lending firms are at the most risk when a big platform goes under or there is a significant change in the market. In their filing, Genesis has listed over 10,000 creditors and reported that the liabilities might range anywhere from $1.2 billion to $11 billion. This could be something on the same scale as the FTX case, but the difference is that it was a complete scam.
A total of 3 petitions were filed by Genesis holding companies. The bankruptcy filing only affects those customers that were involved with the crypto lending business of Genesis. The ones that were in the derivatives and spot trading business will continue as it is. Genesis is also not shutting down completely; just a small part of it actually is because Genesis Global Trading will be functional.
The company’s interim CEO said that the company is continuing its discussions with DCG and the advisors of their creditors as they work towards finding a solution that maximizes value and sets the business up for success in the future. Genesis is listed to pay $765.9 million to Gemini, $78 million to Donut, and $53.1 million to VanEck fund.
Legal action by companies against Genesis
Cameron Winklevoss pointed out quite a while back that Genesis and DCG are not taking the necessary steps to offer credits a fair deal. He also threatened that they are preparing to take legal action against Barry Silbert, DCG, and Genesis. Currently, all they can do is negotiate with the credits, which are represented by Kirkland & Ellis. Even the parent company of Genesis, Digital Currency Group, is under a pile of debt of around $3 billion. So, it’s not that they can come to the rescue of the company.
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