Genesis Global caves to liquidity issues, files for Chapter 11 bankruptcy
Genesis' custody, derivatives, broker-dealer, and spot trading business are not part of the bankruptcy proceedings.
Genesis Global — a Digital Currency Group (DCG) subsidiary — filed for Chapter 11 bankruptcy protection on Jan. 19 in the bankruptcy court of the Southern District of New York, it said in a press release.
The derivatives, spot trading, broker-dealer, and custody arms of Genesis are not part of the bankruptcy filing and are operating normally, the firm said.
Under Chapter 11, the firm is considering restructuring, which will be led by an independent special committee of the board of directors, it said.
The firm has between $1 billion and $10 billion in assets and liabilities, according to the press release. Genesis said it has over $150 million in cash, providing “ample liquidity” to support its business operations and the restructuring process.
The court-supervised restructuring will “provide an optimal outcome for Genesis clients and Gemini Earn users,” the firm said. Genesis owes $900 million to Gemini Earn users.
The crypto lender is exploring a “dual track process” to pursue “sale, capital raise and/or equitization transaction that would enable the business to emerge under new ownership,” it said.
Genesis will start a marketing and sale process for its assets or raise capital and use the proceeds to pay back creditors. However, if the firm fails to close a sale or raise capital, creditors will receive ownership interests in Reorganized Genesis Global, according to the press release.
The firm had been trying to raise capital for months without any results. Its parent firm DCG was reportedly considering liquidating its venture capital holdings to cover Genesis’ $3 billion debt burden.
Genesis froze customer withdrawals in November, soon after the collapse of FTX. Earlier this month, the firm slashed its workforce by 30%.