Genesis Global is the latest cryptocurrency lender to declare bankruptcy following the demise of FTX. Its estimated liabilities range from $1 billion to $10 billion. Genesis stated in a news release dated Jan. 19 that it has been in talks with its creditors' advisors and corporate parent Digital Currency Group (DCG) to determine the best course for asset preservation and business growth.
The Crypto company has now started a restructuring procedure under court supervision to pursue these negotiations. In its Chapter 11 plan, the corporation states that it is considering a "dual track procedure" in which it will pursue a "sale, capital raise, and/or an equitization transaction," which would ostensibly allow the company "to emerge under new ownership."
Genesis's broker-dealer, custody, spot trading, and derivatives businesses are not involved in the Chapter 11 proceedings and will continue to operate, according to the company.
More than $150 million in cash, according to the company, "will provide adequate liquidity to maintain its continued business activities and aid the restructuring process," it further stated.
An "independent special committee" of the company's board of directors will oversee the reorganization process, according to Genesis, which aims to deliver "an optimal conclusion for Genesis clients and Gemini Earn users."
In November 2022, the company stopped allowing withdrawals from its platform due to market turmoil brought on by FTX's demise. Users of Gemini Earn, a yield-bearing product for users of the Genesis-managed Gemini cryptocurrency exchange, were harmed by the change.
The Securities and Exchange Commission (SEC) of the United States brought accusations against the troubled crypto lender and Gemini for allegedly marketing unregistered securities through the Earn program. The parent firm of Genesis, DCG, is raising concerns as it may need to sell some of its $500 million venture capital portfolios in order to try and cover Genesis' liabilities.
DCG stopped paying dividends on January 17 in an effort to "reduce operating expenses and preserve cash." Additionally, it is said that DCG is considering selling its cryptocurrency media outlet CoinDesk, which might bring approximately $200 million.
