Crypto lender and DCG subsidiary Genesis has filed Chapter 11 bankruptcy in the federal court of Manhattan. With this, the crypto firm has become the latest to crumble in the FTX contagion and a heavy blow to the empire of DCG boss Barry Silbert.
The crypto broker cited over 100,000 creditors in a “mega” bankruptcy case, with total obligations ranging from $1.2 billion to $11 billion., as per the bankruptcy documents.
According to reports, Genesis filed three separate petitions. One of the statements mentioned that its derivatives and spot trading, broker-dealer, and custody businesses are not included in Chapter 11 and would continue client trading operations.
Under the Chapter 11 plan, the firm contemplates potential sale and equitization transactions to enable the lending business to emerge under new ownership.
Board member at Genesis, Derar Islim, who was appointed as the firm’s interim CEO in August 2022, send out a statement:
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 its stakeholders.
According to the press release, the firm also announced a restructuring of the lending business to advance ongoing stakeholder discussions further and optimize outcomes for both Genesis clients and Gemini Earn users.
Genesis Bankruptcy Filing Would Speed Up Funds Recovery- Gemini CEO
It needs to be told that Genesis’s parent firms DCG and Gemini were engaged in negotiations after the formerly suspended customer withdrawals in the aftermath of the FTX collapse.
Moreover, the platform-owned high-yield savings product Gemini Earn $900 million.
According to reports, Genesis has $175 million of its assets locked in the bankrupt FTX. and is estimated to owe creditors $3 billion.
Responding to the latest news, Gemini co-founder Cameron Winklevoss tweeted that Genesis’s bankruptcy filing was a crucial step towards recovering customers’ assets.
“Bankruptcy court provides a much-needed forum for that to happen. Sunlight is the best disinfectant”, he added.