The company was considering filing for bankruptcy if it was unable to secure funds to address its liquidity crisis.
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Genesis Global, a crypto lender, has filed for Chapter 11 bankruptcy protection in New York, becoming the newest firm to declare bankruptcy in the wake of FTX's collapse.
In the Southern District of New York, crypto lender Genesis has filed for Chapter 11 bankruptcy.
According to the Jan. 19 filing, the firm's estimated liabilities vary from $1 billion to $10 billion, and its assets are in a similar range.
According to previous reports, the company was considering filing for bankruptcy if it was unable to secure funds to address its liquidity crisis.
Genesis stated in a press release dated Jan. 19 that it has been in contact with its advisors "to its creditors and corporate parent, Digital Currency Group (DCG), to evaluate the most effective path to preserve assets and move the business forward."
"Genesis has now commenced a court-supervised restructuring process to further advance these discussions."
In its Chapter 11 plan, the company states that it is considering a "dual track process" in which it will pursue a "sale, capital raise, and/or an equitization transaction," which would supposedly allow the company "to emerge under new ownership."
Genesis' derivatives, spot trading, broker-dealer, and custody businesses are not included in the Chapter 11 proceedings and will continue to operate, as said by the firm.
It also stated that it had more than $150 million in cash available, which it thinks "will provide ample liquidity to support its ongoing business operations and facilitate the restructuring process."
The company's board of directors will manage the restructuring process under the direction of an "independent special committee," and according to Genesis, the process is designed to provide "an optimal outcome for Genesis clients and Gemini Earn users."
In November 2022, the firm halted allowing withdrawals from its platform due to market instability caused by FTX's collapse. The change impacted users of Gemini Earn, a yield-bearing product for Gemini cryptocurrency exchange users managed by Genesis.
Gemini co-founder Cameron Winklevoss tweeted that the bankruptcy is a "crucial step" toward enabling Gemini users to reclaim their assets, but that DCG and its CEO Barry Silbert "continue to refuse to offer creditors a fair deal" and warned to sue "unless Barry and DCG come to their senses."
The United States Securities and Exchange Commission (SEC) is charging Genesis and Gemini with offering unregistered securities through the Earn program.
The parent company of Genesis, DCG, is raising concerns as it may need to sell some of its $500 million venture capital portfolios to try and cover Genesis' liabilities.
As a means of "reducing operating expenses and preserving liquidity," DCG stopped paying dividends on January 17. According to reports, DCG is also considering selling its crypto media outlet CoinDesk, which could fetch around $200 million.