In the Southern District of New York, bitcoin lender Genesis has filed for Chapter 11 bankruptcy.
The company’s liabilities are expected to be between $1 billion and $10 billion, and its assets are expected to be within the same range, as stated in the filing from January 19th.
Earlier reports indicated the company was considering filing for bankruptcy in the event it was unable to raise enough capital to resolve its liquidity crisis.
On January 19, Genesis issued a statement saying it was in talks with “its creditors and corporate parent Digital Currency Group (DCG) to analyze the most effective manner to preserve assets and move the firm forward to identify the best route to proceed.” ” To move these talks along, Genesis has already begun the reorganization process, which will be supervised by the court.
The company is contemplating a “dual track approach” that might lead to a “sale, capital raising, and/or an equitization transaction,” as stated in the Chapter 11 plan. This would ostensibly allow the business “to emerge under new ownership.”
In spite of the Chapter 11 proceedings, the business claims that derivatives trading, spot trading, broker-dealer services, and custody would all continue as usual at Genesis.
In addition, it has more than $150 million in the bank, which it believes “would provide ample liquidity to sustain its continuing commercial activities and ease the process of restructuring.”
A “best outcome for Genesis customers and Gemini Earn users” is what Genesis says the reorganization is all about. To oversee the overall restructuring, the company’s board of directors has appointed an “independent special committee” to lead the charge.
As a precaution against further market instability caused by FTX’s demise in November 2022, the business temporarily suspended all withdrawals.
Customers of Gemini Earn, a yield-bearing program offered by the Genesis-controlled cryptocurrency exchange, were affected.
Gemini’s co-founder Cameron Winklevoss stated that the bankruptcy is a “crucial step” toward users regaining access to their funds. Cameron Winklevoss, however, said that DCG and its CEO Barry Silbert “continue to refuse to provide creditors a fair settlement.” “Unless Barry and DCG come to their senses,” Cameron Winklevoss said, threatening legal action.
Six, we will be forced to bring a lawsuit against Barry and DCG as soon as possible if they do not come to their senses and make a decent offer to the creditors.
For those who don’t know him, Cameron Winklevoss tweets under the handle “@cameron.” Specifically: January 20th, 2023 The U.S. Securities and Exchange Commission (SEC) is looking into allegations that Genesis and Gemini sold unregistered securities through the Earn program. Both firms are under scrutiny from the SEC.
DCG, Genesis’ parent firm, is increasingly concerned that it may have to liquidate a piece of its $500 million venture capital portfolio to cover Genesis’ commitments.
To “lower operating expenditures and save cash,” DCG suspended dividend payments on January 17, 2019.
A potential sale of DCG’s cryptocurrency media site CoinDesk, which could fetch the corporation an extra $200 million, is rumored to be under consideration.
