Crypto lender Genesisa a subsidiary of Digital Currency Group (DCG), has filed for Chapter 11 bankruptcy. This was done in response to a lawsuit by the US Securities Exchange Commission (SEC). Genesis claims to have enough funds to “maintain its current operations and assist in the restructuring process.”
Genesis Bankruptcy Filing
Genesis Global Holdco LLC, a major affiliate of venture capital firm Digital Currency Group (DCG), declared Friday It has filed for Chapter 11 Bankruptcy in the US Bankruptcy Court for the Southern District of New York. Its subsidiaries involved in the lending business, Genesis Global Capital LLC and Genesis Asia Pacific Pte. Ltd, are included in the filing, while the subsidiaries involved in the custody and spot and derivatives trading businesses and Genesis Global Trading are not included.
“As part of its Chapter 11 filing, Genesis has proposed a roadmap for an exit that includes a Chapter 11 plan,” the company added. The plan includes a bidirectional process to find a sale or capital increase, and/or equity transaction that would enable the business to emerge with a new owner.
Derar Islim, Interim CEO of Genesis, said the company had been attempting to solve its liquidity issues, including those resulting from the default of cryptocurrency-hedge fund Three Arrows Capital (3AC) and the collapse of the cryptocurrency exchange FTX. Islim took up his position in August.
Genesis claims to have more than $150,000,000 in cash on hand to “provide ample liquidity to support its ongoing business operations and facilitate the restructuring process.” The company has made motions to the bankruptcy court “to allow daily operations to continue in the normal course.” This includes the suspension of new loan origination in lending businesses and the processing of claims through the Chapter 11 process.
Gemini Earn Investor Refund
With a court-supervised restructuring process underway, Genesis said it will continue to consult with its creditors and DCG, its parent company, in the hopes of reaching an agreement. This should “provide a holistic solution for its lending business that, if achieved, would provide an optimal outcome for Genesis customers and Gemini Earn users.”
Genesis froze withdrawals from its crypto lending program, Gemini Earn, on November last year, holding approximately $900 million in assets from more than 340,000 investors. On Friday, Gemini co-founder Cameron Winklevoss tweeted that the Genesis bankruptcy filing “is a crucial step” for Earn clients to recover their assets. He added, “Crucially, the decision to bankrupt Genesis does not absolve Barry [Silbert], DCG and any other wrongdoer of accountability.”
We have been preparing to file direct legal action against Barry, DCG, and other individuals who are responsible for fraud that has harmed the 340,000+ Earn Users and any others who have been misled by Genesis and its accomplices.
“Unless Barry and DCG come to their senses and make a fair offer to creditors, we will be filing a lawsuit against Barry and DCG imminently. We also believe that in addition to returning all the money to the creditors, Genesis, DCG and Barry owe them an explanation. The bankruptcy court provides a much-needed forum for that to happen,” Winklevoss concluded.
In April, the US Securities Exchange Commission (SEC) charged Gemini and Genesis Global Capital with the “unregistered offering and sale of securities to retail investors through the Gemini crypto asset lending program.” Earn.
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