Crypto Giant Genesis Files For Bankruptcy As Losses Mount After FTX Collapse

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Topline

Cryptocurrency lender Genesis filed for bankruptcy late Thursday night, court documents show, the latest major player to fold and another blow to the sector as it struggles to recover from the collapse of the Sam Bankman-Frieds FTX exchange last year.

Genesis filed for Chapter 11 bankruptcy on Thursday.

2022 Bloomberg Finance LP Key Facts

Crypto broker Genesis Global Holdco LLC filed for Chapter 11 bankruptcy protection in New York federal court late Thursday night, documents show.

Genesis Global Capital and Genesis Asia Pacific, two subsidiaries that the parent company said were only involved in its lending business, have also filed for bankruptcy.

Genesis Global Holdco and Genesis Asia Pacific each reported assets and liabilities of between $100 million and $500 million.

Genesis Global Capital reported between $1 billion and $10 billion in assets and liabilities and listed over 100,000 creditors in the mega bankruptcy filing, with the top two unsecured claims alone amounting to nearly $1, $3 billion.

Genesis said it has more than $150 million in cash, which will provide enough liquidity to keep the business going and help the restructuring process, noting that its derivatives and cash trading businesses , broker and custodial are not part of the record and continue to operate. as per usual.

Acting Chief Executive Derar Islim said the bankruptcy and legal restructuring offer the company the most effective way to preserve assets and create the best possible outcome for all Genesis stakeholders.

Key Context

Reports of Genesis’ impending bankruptcy have swirled since it suspended client withdrawals amid market turmoil after FTX shut down. Fears grew when the company, hurt by loans to FTX subsidiary Alameda Research, laid off nearly a third of its staff in early January. Chapter 11 bankruptcy allows a business to stay in business while it finds a way to pay its creditors, usually through major reorganizations of its debts and operations. The Genesis filing marks the downfall of another major player in the crypto industry after digital asset prices crashed last year. The grim situation worsened following the collapse of FTX. In addition to FTX, former heavyweights that filed for bankruptcy last year include Celsius, BlockFi, Three Arrows, and Voyager.

To monitor

Court documents list a nearly $800 million loan payable by Gemini, the crypto exchange run by Cameron and Tyler Winklevoss, which has been the subject of a week-long dispute. The Winklevoss twins claimed Gemini owed more than $900 million to some 340,000 Earn investors on the platform. Following the filing, Cameron Winklevoss said bankruptcy does not immunize Genesis’ parent company, Digital Currency Group, or its chief executive Barry Silbert. On Twitter, he threatened to escalate the matter and file a lawsuit with Barry and DCG shortly unless a fair offer to creditors is made.

Further reading

Crypto Broker Genesis cuts 30% of its staff and considers bankruptcy (Forbes)

Who is Barry Silbert, the former crypto billionaire whom Cameron Winklevoss accuses of accounting fraud? (Forbes)

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