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Crypto Lender Genesis Files for Bankruptcy As FTX Fallout Continues

 2 years ago
source link: https://markets.businessinsider.com/news/currencies/crypto-giant-genesis-files-bankruptcy-chapter-11-ftx-collapse-2023-1
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Crypto lender Genesis files for bankruptcy as the fallout from FTX's collapse continues

Jan 20, 2023, 10:38 AM
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Crypto giant Genesis filed for bankruptcy on Thursday. (Photo illustration by Jonathan Raa/NurPhoto via Getty Images)
  • Crypto lender Genesis filed for bankruptcy Thursday, the latest fallout from FTX's collapse. 
  • The parent company of Genesis, Digital Currency Group has been battling liquidity issues. 
  • Bankruptcy documents show Genesis has more than 100,000 creditors, with liabilities up to $11 billion. 
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Crypto lender Genesis Global Holdco filed for bankruptcy protection Thursday, the latest firm to fall victim to the past year's rout in digital assets and the repercussions of FTX's collapse.

The company and two of its lending arms, Genesis Global Capital and Genesis Asia Pacific, filed voluntary petitions under chapter 11 of the US Bankruptcy Code, citing "liquidity issues". It has over 100,000 creditors, with assets and liabilities ranging from $1.2 billion to $11 billion dollars, according to bankruptcy documents. 

"While we have made significant progress refining our business plans to remedy liquidity issues caused by the recent extraordinary challenges in our industry, including the default of Three Arrows Capital and the bankruptcy of FTX, an in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all Genesis stakeholders," said Genesis' interim CEO Derar Islim.

The filing comes as Genesis and its parent company Digital Currency Group face financial woes resulting from the collapses of high-profile crypto companies such as FTX and Three Arrows Capital. The Financial Times reported that Genesis owes its creditors more than $3 billion. 

Genesis in November halted redemptions following FTX's implosion and warned at the time that bankruptcy was possible unless it could find fresh capital.

Turmoil at the crypto giant leaked over to its lending partner Gemini, a cryptocurrency platform headed by Cameron and Tyler Winklevoss. It sparked a public spat between the two crypto firms given Genesis owes Gemini more than $900 million under an interest-bearing program. 

Meanwhile, the two firms have been sued by the Securities and Exchange Commission for the offer and sale of unregistered securities. 

According to reports, Genesis has more than $150 million in cash which will support the company through its restructuring process. 

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