Key takeaways:
- Genesis filed for bankruptcy, citing 3AC and FTX collapse as the culprit
- The company will use $150 million in its cash on hand to finance the “restructuring process”
- Genesis reportedly owes $3.5 billion to its top 50 creditors alone
The collapse of the FTX crypto exchange sealed Genesis’ fate
Genesis, a cryptocurrency lending and trading platform, filed for Chapter 11 bankruptcy on Thursday. According to a press release, the company is planning to restructure its business to “maximize value for all clients and stakeholders.”
Genesis’ parent company Digital Currency Group (DCG) has reportedly been in contact with creditors for some time before the bankruptcy process officially started, trying to reach a “holistic solution” that would be an “optimal outcome” for Genesis clients and Gemini Earn users.
Genesis outlined its path forward in the following statement:
“As part of its Chapter 11 filing, Genesis has proposed a roadmap to an exit including a Chapter 11 plan (the “plan”) that calls for a framework for a global resolution of all claims through, and the creation of, a trust that will distribute assets to creditors.”
“The plan contemplates a dual track process in pursuit of a sale, capital raise and/or equitization transaction that would enable the business to emerge under new ownership,” added Genesis.
The reason for the bankruptcy is rooted in the “extraordinary challenges” the company faced in recent months. First came the insolvency of the cryptocurrency hedge fund Three Arrows Capital, which put a considerable dent in Genesis’ financial standing. However, the final nail in the coffin was the bankruptcy of FTX, according to the press release.
At the time of the filing, the company had $150 million in cash on hand, which it plans to use to finance the “restructuring process”.
According to the bankruptcy filing, the total assets and liabilities between Genesis and its subsidiaries are estimated between $1 billion and $10 billion. Following the filing, Coinbase reported that Genesis owes as much as $3.5 billion to its top 50 creditors alone.
