Genesis Files for Chapter 11 Bankruptcy After Months of Tension
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Genesis, a crypto lending company, has filed for Chapter 11 bankruptcy as the market is still shaken by falling prices and the demise of FTX.
Genesis Global Holdco LLC, Genesis Global Capital LLC, and Genesis Asia Pacific Pte. Ltd., two of its lending-related businesses, filed for bankruptcy protection in New York.
Genesis stated that Genesis Global Trading and its other companies engaged in derivatives, spot trading, and custody businesses are not covered in the filing and continue to conduct client trading operations.
In order to sustain its ongoing business operations and help with its restructuring, Genesis claimed to have more than $150 million in cash on hand.
Genesis Has Been on the SEC’s Radar for a While
The Securities and Exchange Commission (SEC) took legal action against Genesis Global Capital and the cryptocurrency exchange Gemini last week on the grounds that they sold unregistered securities through a well-known program that promised to pay out high-interest rates on cryptocurrency deposits.
Following a steep decline in cryptocurrency values last year, which exposed largely retail investors to billions of dollars in losses, the SEC filed a case as part of a larger crackdown on the industry by many US government agencies.
Genesis’ restructuring strategy calls for the establishment of a trust that will allocate assets to creditors. The strategy takes into account a dual-track approach and examines potential sales, capital raises, or other business-related transactions that would enable the company to emerge under new ownership.
In order to monetize Genesis Global Holdco’s assets or otherwise obtain funds, the New York-based company will begin a marketing and sale process. Creditors will be paid with the revenues of the sale. In the event that no sale or capital raise takes place as a result of the process, creditors will be given ownership stakes in a reformed Genesis Global Holdco.
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