Genesis Might File for Bankruptcy: When Will This Chain Stop?

Genesis owes more than $3 billion to its creditors.
It had prolonged exposure to FTX and 3AC.
Asked industry bigs for a cash injection.

Crypto conglomerate Digital Currency Group is also affected by FTX collapse, its daughter company Genesis Global Capital, a crypto brokerage firm, could be filing for bankruptcy probably this week. The brokerage firm owes nearly $3 billion to its creditors. This was revealed by people close to the situation and was reported by Bloomberg.

ICYMI: Genesis is laying the groundwork for a bankruptcy filing as soon as this week.
The crypto lending unit of Digital Currency Group has been in confidential negotiations with various creditor groups amid a liquidity crunch. More details here: https://t.co/XWoIZqFgMv pic.twitter.com/ewpqAdzAwZ
— Bloomberg Crypto (@crypto) January 19, 2023

Genesis owes more than $3 billion to its creditors, and with their current status, it is unlikely that it will be able to repay on its own any time soon. Hence DCG might sell some parts of its venture capital holdings to support repayments.

They have asked Apollo and the biggest crypto exchange for a cash injection to support them but were denied; Apollo might or might not do it.

What happened with Genesis?

Genesis is a subsidiary of the Digital Currency Group (DCG) and had massive and prolonged exposure with the once third largest crypto exchange FTX and failed crypto hedge fund, 3 Arrows Capital. This caused great losses, and they weren’t able to stand since. The plans for chapter 11 bankruptcy filings cloud change as the company continuously talks with its creditors.

Genesis Global had nearly $175 million stuck in the now-bankrupt crypto exchange FTX and was caught up in the contagion. Due to this, they have halted new loans and withdrawals from November 16, 2023. They have also lent $2.4 billion to the failed cryptocurrency hedge fund 3AC, while the apparent company lent them $1.2 billion.

All this amount stuck or probably lost has resulted in a situation where they might have to file for bankruptcy soon. Genesis’ financial troubles have also affected Gemini, and GOPAX crypto exchanges are both suffering and have halted withdrawals. Gemini had an Earn program, of which Genesis was the lending partner; it has also failed.

Can it be saved?

The aftermath of another crypto entity filing for chapter 11 bankruptcy is yet to be understood, but parent company DCG is trying to save its daughter, as reported by the media. SoftBank had a $100 million stake in FTX, including Bain Capital, Rabbit Capital and CapitalG growth fund.

Crypto industry and Chapter 11 bankruptcy

The conditions prevailing in the crypto market in 2022, including a harsh crypto winter, and collapses of bigger trees in the jungle, have shaken the ground and killed or affected many in their wake. But as they say, life continues, and many affected people are trying to recover.

The major Chapter 11 bankruptcy filings are:

3 Arrows Capital on June 27, 2022, FTX & Alameda, and 130+ entities on November 11, 2022. Celsius network on July 13, 2022, while Voyager Digital filed on July 6, 2022. All of them have somewhat similar reasons.

Entities on the verge of joining bankruptcy club:

Some entities are suffering badly and might be filing for bankruptcy soon; the sad list includes Babel Finance, BitMEX, CoinFlex, Finblox, BlockFi, and Genesis.

Last year was not good for the industry, and people should hope 2023 will be different.