Genesis Files for Bankruptcy in Latest FTX-Fueled Contagion

Genesis Files for Bankruptcy in Latest FTX-Fueled Contagion

The collapse of Genesis was major fueled by its deep exposure to two of the most severe bankruptcies in the digital currency ecosystem.

Godfrey Benjamin By Godfrey Benjamin Updated 3 mins read
Genesis Files for Bankruptcy in Latest FTX-Fueled Contagion
Photo: Shutterstock

After more than a month of exploring its options, Genesis Global Holdco LLC, a subsidiary of the Digital Currency Group (DCG) has filed for Chapter 11 bankruptcy protection in the United States as it seeks the court’s protection amid its failure to meet its personal obligations. The bankruptcy filing names two of its subsidiaries including Genesis Asia Pacific Pte. Ltd and Genesis Global Capital, LLC and it prayed the court to handle the bankruptcy as a joint affair for the trio.

Genesis Global said its credits and liabilities fall within the range of $1 billion and $10 billion respectively and that it has as many as 100,000 creditors. While this liability seems very bogus, the duo of Genesis Asia Pacific and Genesis Global Capital said their own credits and liabilities fall within the $100 million and $500 million range.

Despite the insolvency and bankruptcy filing, two of Genesis’ subsidiaries are still operating as usual. These subsidiaries including its outfit offering derivatives and custody services as well as Genesis Global Trading were not named per a press release.

“We have crafted a deliberate process and roadmap through which we believe we can reach the best solution for clients and other stakeholders,” said Paul Aronzon, an independent director at Genesis. “We look forward to advancing our dialogue with DCG and our creditors’ advisors as we seek to implement a path to maximize value and provide the best opportunity for our business to emerge well-positioned for the future.”

The company said it expects that at the end of the restructuring process, it will have enough funds left to repay its unstructured creditors. Per the announcement, it has retained Moelis & Company which it first appointed when it suspended withdrawals last year to keep acting as its financial advisor. Cleary Gottlieb Steen & Hamilton LLP is acting as legal counsel. Alvarez & Marsal is serving as restructuring advisors.

Genesis Bankruptcy and the Gemini Brawl

The collapse of Genesis was major fueled by its deep exposure to two of the most severe bankruptcies in the digital currency ecosystem. These include the crypto hedge fund Three Arrows Capital (3AC) and FTX Derivatives Exchange. The FTX tragedy struck when Genesis and DCG have not yet recovered from the 3AC implosion.

One major firm that has been bearing the brunt of the current collapse of Genesis is Gemini exchange which trusted the former as a partner for its Earn program. With over $900 million in locked-up funds belonging to Gemini Earn customers, the failure of the duo to find an amicable resolution has stirred a heated brawl between Cameron Winklevoss, the co-founder of Gemini, and Barry Silbert, Chairman of the DCG group of companies.

Following the bankruptcy filing, Cameron shared in a tweet that he believes the funds owed to Gemini stand a better chance of being recouped. He even threatened a lawsuit should Silbert and his firm not make a fair offer to creditors.

Godfrey Benjamin

Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.

Godfrey Benjamin on X