Crypto lending firm Genesis could file for bankruptcy this week

YEREVAN (CoinChapter.com) — Cryptocurrency lender Genesis Global Capital could be the next big industry name to go down. According to a new report by Bloomberg, people with knowledge of the situation have claimed the crypto firm could file for Chapter 11 bankruptcy as early as this week.

The news comes as no surprise to industry insiders and those following the developments in the cryptocurrency market. As CoinChapter reported last November, the firm froze customer withdrawals and sought a $1 billion emergency loan in an attempt to save itself from closure. It reportedly owes its creditors over $3 billion.

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No chance of Genesis Global Capital? 

The cryptocurrency market has been in turmoil in 2022. The crash of the Terra (LUNA) ecosystem sent shockwaves across the industry. Several major players caught themselves off-guard. 

The downfall of Sam Bankman-Fried’s crypto empire, including his exchange FTX at the end of 2022, also caused major damages. Crypto lender BlockFi and mining giant Core Scientific Inc filed for bankruptcy soon after. 

In early January 2023, reports emerged that Genesis was working with investment bank Moelis & Co. to file for Chapter 11 bankruptcy. Moreover, the firm also laid off 30% of its workforce amid the crisis. 

As the report confirms, Genesis Global, its parent firm Digital Currency Group, and its creditors have held several discussions on the future of the crypto giant. To make matters worse, Genesis is also facing a major dispute with cryptocurrency exchange Gemini.

In early 2021 Genesis partnered with the crypto firm Gemini to offer an interest-earning program called “Earn”. It now insists the crypto lender owes it around $900 million. 

Earlier this month, the US Securities Exchange Commission (SEC) charged both firms with securities fraud in connection with the product.

“In December 2020, Genesis, a subsidiary of Digital Currency Group, entered into an agreement with Gemini to offer Gemini customers, including retail investors in the United States, an opportunity to loan their crypto assets to Genesis in exchange for Genesis’ promise to pay interest,”

  the official SEC filing read.

However, some people have also come forward to point out that the news of Genesis going bankrupt could be a hoax. While it may not be a “done deal” just yet, it has been on the cards long enough. It is unlikely that anyone can save Genesis Global at this point.