Genesis says it has $150 million in cash to complete the restructuring process and support the operations of its still active subsidiaries.
Genesis, a cryptocurrency lending platform, has filed for Chapter 11 bankruptcy protection, saying it is suffering the fallout from the spectacular implosion of the FTX cryptocurrency exchange.
The parent entity, Genesis Global Holdco, and two of its subsidiaries (Genesis Global Capital and Genesis Asia Pacific) filed papers Thursday night in the bankruptcy court of the Southern District of New York.
100,000 creditors affected
The other subsidiaries of the New York company specializing in derivatives, cash transactions and protection of crypto assets, as well as its branch dedicated to brokerage, are not affected by this procedure and continue their activities, Genesis specified. . The platform, which says it has more than 100,000 creditors and between $1 billion and $10 billion in assets and liabilities, is the latest casualty of the collapse of FTX and brokerage and investment firm Alameda Research.
Their founder, Samuel Bankman-Fried, is charged in the United States, in particular with fraud and criminal conspiracy. He is suspected of using funds deposited by FTX clients to conduct speculative financial transactions through Alameda Research. FTX and Alameda filed for bankruptcy in November, sending shockwaves throughout the cryptocurrency market. A few days after these bankruptcies, Genesis, a subsidiary of Digital Currency Group, had suspended the ability for lenders to withdraw their cryptocurrencies.
The company had lent significant amounts to Alameda as well as Three Arrows Capital, a Singaporean cryptocurrency hedge fund that also went bankrupt last year. The company also has a dispute with the Gemini trading platform, which wants to recover the roughly $900 million in cryptocurrency it placed with Genesis.
The US stock market watchdog, the SEC, last week sued Genesis and Gemini for offering to provide loans without registering with the relevant authorities.
“Although we have made significant progress in refining our development plan to address the liquidity issues caused by recent unusual challenges in our industry, including the payment default of Three Arrows Capital and the bankruptcy of FTX, a restructuring is the most effective way to preserve assets and create the best possible outcome for all Genesis stakeholdersDerar Islim, the company’s acting chief, said in a statement.
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