Late Thursday night, Genesis Global announced it voluntarily filed for chapter 11 bankruptcy, along with its crypto lending arm Genesis Global Capital and lending unit Genesis Asia Pacific. In a press release, Genesis used every buzzword it could think of to frame the move in a positive light.
Genesis initiates process to achieve global resolution to maximise value for all clients and stakeholders and strengthen its business for the future, the headline to announce its bankruptcy reads.
The company and its subsidiaries are part of Barry Silbert’s Digital Currency Group (DCG), which is currently under immense financial pressure. DCG suspended shareholder payouts on Wednesday in an effort to “reduce operating expenses” and preserve liquidity, Silbert explained in a letter to shareholders.
Silbert blames the conglomerate’s problems on a “wave of unprecedented fraud and criminal behaviour” in the crypto industry. Indeed, DCG’s hard times have been exacerbated by Genesis Global Capital’s liquidity issues ever since crypto hedge fund Three Arrows Capital and crypto exchange FTX collapsed.
Bankruptcy filings reveal that Genesis’ crypto lending unit had assets and liabilities between $1 billion and $10 billion, and reportedly had over 100,000 creditors.
Read more: Fraud, crime, and the Winklevii force DCG to freeze dividend payouts
“While we have made significant progress refining our business plans to remedy liquidity issues caused by the recent extraordinary challenges in our industry, including the default of Three Arrows Capital and the bankruptcy of FTX, an in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all Genesis stakeholders,” said Derar Islim, interim chief exec at Genesis, in its press release.
Genesis further announced that, in its bankruptcy filings, it proposed a plan that included the creation of a trust “that will distribute assets to creditors” as well as a potential sale that would “enable the business to emerge under new ownership.”
Genesis parent company DCG rolls in the mud with Winklevii
DCG and Genesis Global Trading — which has not been named in bankruptcy filings — owe over $900 million to Gemini Earn. Gemini is owned by the Winklevoss twins, collectively known as the Winklevii.
According to Cameron Winklevoss, Silbert has ignored the entrepreneurial twins’ attempts to settle the matter, prompting a heated dispute.
“For the past six weeks, we have done everything we can to engage with you in a good faith and collaborative manner in order to reach a consensual resolution for you to pay back the $900 million that you owe, while helping you preserve your business,” he wrote in an open letter to Silbert that he published on Twitter.
“However, it is now becoming clear that you have been engaging in bad faith stall tactics.”
Tensions have only escalated since the letter was published. In a tweet posted just minutes after Genesis filed for bankruptcy, Cameron Winklevoss threatened to sue Silbert over the repayment of the $900 million loan.
“Unless Barry and DCG come to their senses and make a fair offer to creditors, we will be filing a lawsuit against Barry and DCG imminently.”
Read more: Genesis pressure mounts as Cameron Winklevoss threatens Barry Silbert
The Winklevoss twins aren’t the only ones to have a sour taste in their mouth regarding Silbert’s business approach. According to Digital Assets Data founder Mike Alfred, DCG grew too rapidly for its leader to maintain proper oversight.
“The organization got so big,” Alfred told International Business Times. “It was almost like a victim of its own success. Barry was no longer able to manage the risk management himself at every subsidiary.”
Following the news of Genesis filing for bankruptcy, Cameron Winklevoss updated Gemini Earn users, informing them it was a “crucial step” to seeing the return of their assets.
Quotes in bold are our emphasis. For more informed news, follow us on Twitter and Google News or listen to our investigative podcast Innovated: Blockchain City.
Source: https://protos.com/genesis-files-for-chapter-11-bankruptcy-as-winklevii-threaten-dcg-lawsuit/