Genesis Expected To File For Bankruptcy This Week

Genesis Global Capital, a troubled crypto lending company, plans to file for bankruptcy as early as this week. Genesis faceds a liquidity crunch triggered by the bankruptcies of Three Arrows Capital and the FTX exchange.

Genesis expected to file for bankruptcy this week

According to Bloomberg, Genesis is currently holding talks to discuss bankruptcy, but there is also a likelihood that plans could change. Genesis had earlier warned that it could enter into bankruptcy if it failed to raise the funding needed to resume withdrawals on its lending unit.

Genesis is a subsidiary of Digital Currency Group (DCG). Cracks in the company’s financial status began to emerge after the crypto hedge fund Three Arrows Capital collapsed. Genesis had lent money to them. Genesis halted withdrawals in November after FTX’s fallout as the lender held some funds on the exchange.

The financial situation at Genesis has had ripple effects across the sector, with one of the most affected parties being Gemini, a cryptocurrency exchange founded by Cameron and Tyler Winklevoss. Gemini offered an Earn product that allowed Gemini users to receive yield when they lent coins through Genesis. After Genesis suspended withdrawals, redemptions at Gemini Earn were also halted.

Genesis, DCG, and creditors have made several proposals, but they are yet to reach an agreement to resolve the company’s financial status. Kirkland & Ellis and Proskauer Rose are advising the creditors at the company.

Among the things that the company is considering is restructuring. Genesis has already shared proposals for the same with its creditors, with some suggesting a combination of cash and equity from DCG. Recently, DCG informed shareholders that it would suspend quarterly dividends to preserve cash.

If Genesis files for bankruptcy, it will join the long list of crypto companies that have filed for bankruptcy in the past year, including Three Arrows Capital, Celsius, Voyager, BlockFi, and FTX.

Bankruptcy amid SEC lawsuit and Gemini conflict

Genesis is considering filing for bankruptcy at a time when the company is facing a lawsuit from the US Securities and Exchange Commission. The SEC filed a lawsuit against Gemini and Genesis, alleging that the two companies engaged in an unregistered securities offering. The SEC says that Gemini Earn is an unregistered security that should have been registered with the commission.

Genesis is also in conflict with Gemini due to the failure of Gemini Earn users to access their funds. Cameron Winklevoss has penned two open letters addressing the matter, alleging that Genesis owes around $900 million to 340,000 Gemini Earn users. Winklevoss said that Genesis had failed to resolve the issue despite Gemini extending several proposals to the lender.

In the second open letter addressed to the board of DCG, Winklevoss urged the board to consider removing Barry Silbert as the company’s CEO. Winklevoss said that Genesis failed to disclose its actual financial situation after the demise of 3AC and made false representations to the investors of Gemini Earn.

Related

FightOut (FGHT) – Newest Move to Earn Project

• CertiK audited & CoinSniper KYC Verified
• Early Stage Presale Live Now
• Earn Free Crypto & Meet Fitness Goals
• LBank Labs Project
• Partnered with Transak, Block Media
• Staking Rewards & Bonuses