Crypto Lending Firm Genesis Files For Bankruptcy With Gemini, Van Eck And Other Creditors

Genesis Global files for bankruptcy

Genesis Global Capital, a crypto asset (virtual currency) lending company, announced on the 19th that it has filed for bankruptcy under Chapter 11 of the US Bankruptcy Code.

Genesis has 100,000 creditors and estimated debts of $1 billion to $10 billion, according to Genesis’ bankruptcy filings released Monday by the US Bankruptcy Court for the Southern District of New York. Assets held are also about the same.

Genesis’ entities include Genesis Global Capital, Genesis Asia Pacific, a crypto lending subsidiary. Due to the direct impact of the default of the bankrupt Three Arrows Capital (3AC) and the bankruptcy of FTX, withdrawal of customer assets has been suspended since November last year. Its partner cryptocurrency exchange Gemini was also affected.

The parent company is Grayscale, which issues the investment trust “GBTC”, and the Digital Currency Group (DCG), which owns Coindesk, the largest crypto asset media, and there are concerns about the impact on the market.

senior creditor

The top creditors and their breakdown are Gemini Trust Company, which operates the crypto exchange Gemini, with $766 million, leading market maker Cumberland DRW with $18.7 million, and cryptocurrency fund Mirana Ventures with $151.5 million in assets. Includes $53 million in management company VanEck’s New Finance Income Fund.

Regarding the application for Chapter Eleven application, Genesis explained, “It is a strategic action to maximize the value of all customers and stakeholders and obtain solutions to strengthen the business in the future.” The $150 million in cash on hand will provide sufficient liquidity to continue operating the business and expedite the restructuring process, the company said.

Regarding the reorganization (business revitalization) plan, he said that he is considering a “dual-track process” that seeks to raise funds and sell the business, and that he is also considering restarting the business under a new owner.

Genesis independent director Paul Aronzon has indicated that he intends to proceed with dialogue with parent company, cryptocurrency conglomerate Digital Currency Group (DCG) and creditor advisors.

Joint application by three companies, including a subsidiary

Genesis Global’s subsidiaries, Genesis Asia Pacific and Genesis Global Capital, have also jointly filed in bankruptcy court. Both companies have reported assets and liabilities ranging from $100 million to $500 million each.

Genesis Global’s other businesses, including derivatives spot trading and other subsidiary Genesis Global Trading related to broker-dealer custody business, are excluded from Chapter Eleven and will continue to operate client trading operations.

Genesis Capital fell into a liquidity crisis due to the bankruptcy of FTX in November 2010, and stopped withdrawing customer funds and new loans. About ¥22 billion ($175 million) was tied up in an FTX account.

As a result, the yield service “Gemini Earn”, which was jointly provided with Genesis, was also suspended. U.S. cryptocurrency exchange Gemini is asking DCG to return a total of 116 billion yen ($900 million) in user funds.

Relation:Crypto lender Genesis to file for bankruptcy this week: reports