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(AP) — Crypto lending company Genesis files for Chapter 11 bankruptcy protection as falling prices and the fall of FTX continue to rock the industry.
Genesis Global Holdco LLC and two of its lending business subsidiaries, Genesis Global Capital LLC and Genesis Asia Pacific Pte. Ltd., filed for bankruptcy protection in the Southern District of New York. Genesis said its other subsidiaries involved in derivatives and spot and custody trading businesses and Genesis Global Trading are not included in the filing and are continuing client trading operations.
Genesis said it has more than $150 million in liquidity, providing enough liquidity to support its ongoing business operations and facilitate its restructuring.
Last week, the Securities and Exchange Commission went after Genesis Global Capital and crypto exchange Gemini, alleging they were selling unregistered securities through a popular program that supposedly pays high interest on crypto deposits.
The SEC lawsuit is part of a broader crackdown on cryptocurrency by several US government agencies after crypto prices plummeted last year, primarily exposing retail investors to billions of dollars in losses. .
Genesis’ restructuring plan includes the creation of a trust that will distribute assets to creditors.
The plan envisions a two-track process and contemplates a possible sale, capital raise or other transaction that would see the company emerge under new ownership. The New York-based company will initiate a marketing and sales process to monetize the assets of Genesis Global Holdcos or otherwise raise capital, using the transaction proceeds to pay creditors. If the process does not result in a sale or a capital increase, the creditors will receive stakes in a reorganized Genesis Global Holdco.
Although we have made significant progress in refining our business plans to address liquidity issues caused by recent extraordinary challenges in our industry, including the default of Three Arrows Capital and the bankruptcy of FTX, a litigation represents the most effective way to preserve assets and create the best possible outcome for all Genesis stakeholders, Interim CEO Derar Islim, who took office in August, said in a statement.
Copyright 2023 The Associated Press. All rights reserved.
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