Crypto Lender Genesis Files for Bankruptcy Following SEC Lawsuit – Featured Bitcoin News

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Crypto lender Genesis, a subsidiary of Digital Currency Group (DCG), has filed for Chapter 11 bankruptcy. The filing follows a lawsuit filed by the United States Securities and Exchange Commission (SEC). Genesis says it has “sufficient liquidity to support its ongoing business operations and facilitate the restructuring process.”

Genesis filing for bankruptcy

Genesis Global Holdco LLC, a leading brokerage subsidiary of venture capital firm Digital Currency Group (DCG), announced on Friday that it has voluntarily filed for Chapter 11 bankruptcy with the US Bankruptcy Court. of the Southern District of New York.

The Company’s two trading subsidiaries, Genesis Global Capital LLC and Genesis Asia Pacific Pte. Ltd., are part of the bankruptcy filing while “other subsidiaries involved in derivatives and cash trading and custodial businesses and Genesis Global Trading are not included in the filing and are continuing trading operations customers,” the announcement said.

“As part of its Chapter 11 filing, Genesis offered a roadmap to release including a Chapter 11 plan,” the company detailed, adding:

The plan envisions a two-track process in pursuing a sale, capital raising and/or shareholding transaction that would allow the company to emerge under new ownership.

Derar Islim, interim CEO of Genesis, explained that prior to the bankruptcy filing, the company tried to “resolve liquidity issues”, including those caused by the failure of crypto hedge fund Three Arrows Capital (3AC) and the collapse of the crypto exchange. FTX. Islim was appointed to his post last August.

Genesis says it has more than $150 million in cash which “will provide sufficient liquidity to support its ongoing business operations and facilitate the restructuring process.” The company has filed petitions with the bankruptcy court “to allow day-to-day operations to continue in the normal course.” The ad adds:

Buyouts and new loans in the lending industry remain suspended and claims will be dealt with through the Chapter 11 process.

Refund Gemini Earn Investors

With a court-supervised restructuring process, Genesis said it plans to advance discussions with its creditors and parent company DCG in hopes of reaching “a holistic solution for its lending business, which, if it was done, would provide optimal result for Genesis customers and Gemini Earn users.

Genesis and crypto exchange Gemini have been in a feud over Gemini’s crypto lending program, Earn. Genesis froze withdrawals last November while holding approximately $900 million in investor assets from more than 340,000 Gemini Earn investors.

Gemini co-founder Cameron Winklevoss said on Twitter on Friday that Genesis’ filing for bankruptcy “is a critical step” for Earn’s clients to recover their assets. However, he noted, “Crucially, the decision to bankrupt Genesis does not isolate Barry [Silbert]DCG and any other culprit of responsibility”, elaborating:

We are preparing to take direct legal action against Barry, DCG and others who share responsibility for the fraud that harmed over 340,000 Earn users and others duped by Genesis and its accomplices. .

“Unless Barry and DCG come to their senses and make a fair offer to creditors, we will be taking legal action against Barry and DCG shortly. We also believe that in addition to owing the creditors all their money, Genesis, DCG and Barry owe them an explanation. The bankruptcy court provides a much-needed forum for this to happen,” the Gemini co-founder concluded.

Last week, the U.S. Securities and Exchange Commission (SEC) charged Gemini and Genesis Global Capital “for the unregistered offering and sale of securities to retail investors through the Gemini Earn crypto asset lending program. “.

What do you think of Genesis’ bankruptcy filing? Let us know in the comments section below.

Kevin Helms

An economics student from Austria, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests include Bitcoin security, open source systems, network effects, and the intersection between economics and cryptography.

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