Genesis Could File for Bankruptcy Without Funding
- Bloomberg sources have said that Genesis warned investors it could possibly file for bankruptcy if it fails to cover a $1 billion shortfall caused by the collapse of FTX.
- Crypto exchange Gemini, whose Earn program was affected by Genesis’ withdrawal suspension, noted it continues to work with the company to fulfil its obligation to Earn users.
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Crypto lending company Genesis could potentially file for bankruptcy should it fail to raise fresh capital and cover a $1 billion shortfall from FTX’s collapse, Bloomberg reported on 21 November.
The publication cited “people with knowledge of the matter”, who said the firm was having a difficult time raising money for its lending business, which has faced a liquidity crunch ever since FTX filed for Chapter 11 bankruptcy protection. The individuals also noted that Genesis warned investors that if it fails to raise fresh capital it could potentially file for bankruptcy. A spokesperson for the company said in a statement:
“We have no plans to file bankruptcy imminently. Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”
Last week, Genesis Global Capital announced it would “temporarily suspend” redemptions and new loan originations due to the “unprecedented market turmoil” caused by the collapse of FTX, where it had $175 million in locked assets. The Wall Street Journal later reported that the company had tried to seek an emergency loan of $1 billion from investors before it decided to suspend withdrawals on the platform. The publication also claimed that Genesis had turned to Binance and Apollo Global Management for help, and that Binance had declined to invest due to potential conflicts of interest.
Cryptocurrency exchange Gemini was also affected at the time, and revealed it would not be able to meet customer redemptions for its Earn program in the service-level agreement’s time frame of five days as Genesis was its lending partner. Gemini provided an update earlier today, noting that it is working with Genesis — and its parent company Digital Currency Group — to explore every possible option that will allow it to fulfill its obligations to Earn users.
- A little over $13 million in altcoins were sent to crypto exchanges Binance and Coinbase in the past 24 hours, which is in accordance with a September court order.
- The court ordered a phased liquidation process, which allows the bankruptcy estate to sell $3.4 billion worth of digital assets over a certain period of time.
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- An investigation from the New York Attorney General’s office has allegedly found that Gemini was aware of Genesis’ weak financial position, but still lied to investors.
- The lawsuit is looking to ban DCG, Genesis, and Gemini from the New York financial industry, seek restitutions for investments, and the return of “ill-gotten gains”.
- The bankrupt crypto lender said that if its reorganization plan is approved, it is ready to start repaying its customers using $2 billion in BTC and ETH by the end of the year.
- If given the green light, Celsius will restart its business under the “NewCo” brand without any funded debt, and with seed funding of up to $450 million.