Genesis Global Files for Chapter 11 Bankruptcy after Raking Over $3.5B in Debt

Key Takeaways:

  • Cryptocurrency lender Genesis has finally filed for Chapter 11 bankruptcy
  • The firm made several attempts to save itself after suffering losses from the collapse of Three Arrows Capital & FTX last year
  • It nor reportedly owes billions of dollars to creditors, including Gemini which has threatened to sue it.
Bankruptcy document with wooden gavel, Buseniss concept.
Genesis Global Files for Chapter 11 Bankruptcy after Raking Over $3.5B in Debt

YEREVAN (CoinChapter.com) — Genesis Global is officially bankrupt. According to reports, the parent company of the battered cryptocurrency lender has filed for Chapter 11 bankruptcy protection despite several desperate attempts to keep itself afloat following the losses it suffered in 2022’s crypto market collapse. The firm has over $3.5 billion in debt to top creditors alone. 

Three firms related to Genesis Global Holdco, LLC and its subsidiaries Genesis Asia Pacific Pte. Ltd and Genesis Global Capital, LLC filed for bankruptcy protection.  

At the time of the filing, Genesis Global Capital, which launched the defunct ‘Earn’ program with crypto exchange Gemini, claimed to have over 100,000 creditors. The total debt of the industry giant could have a total debt reaching up to $10 billion. 

Meanwhile, Genesis Asia Pacific and Genesis Global Capital claimed their assets and liabilities in the $100 million and $500 million range, respectively, according to CoinDesk, which, along with the bankrupt entities, is owned by the Digital Currency Group.

After months of trying to save itself, Genesis has finally filed for bankruptcy
After months of trying to save itself, Genesis has finally filed for bankruptcy.

Yesterday, on January 19, 2023, CoinChapter reported that the filing could come as early as the end of this week. The firm had frozen customer withdrawals last November and sought a $1 billion emergency loan in an attempt to save itself from closure. 

The debacle came amid the collapse of Sam Bankman-Fried’s crypto empire, which sent shockwaves amid the industry. Genesis had also suffered heavy losses earlier when popular hedge fund Three Arrows Capital became insolvent

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. 

Genesis Owes Over $3.5B to Top 50 Creditors

Genesis Global reportedly owes over $3.5 billion to its top 50 creditors. These include well-known industry names, such as Crypto exchange Gemini ($766 million) and MoonAlpha Finance ($150 million). It also owes global investment manager VanEck through its New Finance Income Fund ($53 million) and trading giant Cumberland ($18.7 million), among others. 

Genesis, which filed for Chapter 11 bankruptcy protection, owes billions to creditors, including to crypto exchange Gemini
Genesis, which filed for Chapter 11 bankruptcy protection, owes billions to creditors.

The crypto lender also owes huge sums to some unknown creditors. One such creditor has $462.2 million to claim, while another has $230 million to receive from it. 

Genesis hopes the Chapter 11 bankruptcy will help it mitigate the impact it has had on investors. 

“An in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all Genesis stakeholders,”  

interim CEO Derar Islam Genesis’ in a statement.

The firm currently has $150 million cash on hand. This will be enough to sustain it during the restructuring process.

Recommended: SEC charged Gemini and Genesis with securities fraud – regulation by “enforcement” continues

Cryptocurrency exchange Gemini and Genesis are locked in a long public battle emerging from an earlier partnership. In early 2021 Genesis partnered with Gemini to offer an interest-earning program called “Earn.”  

Gemini now insists the crypto lender owes it around $900 million in customer funds that it continues to withhold. 

When news of the Chapter 11 bankruptcy broke, Gemini co-founder and president Cameron Winklevoss threatened to go the extra mile. According to him, Gemini “will use every tool available to us in the bankruptcy court to maximize recovery for Earn users and any other parties within the bankruptcy court’s jurisdiction.”

Gemini CEO Cameron Winklevoss has threatened to sue Digital Currency Group after Genesis filed for Chapter 11 bankruptcy
Gemini CEO Cameron Winklevoss has threatened to sue Digital Currency Group

Winklevoss demanded accountability from Barry Silbert, the founder of Digital Currency Group, the owner of Genesis. 

“Unless Barry and DCG come to their senses and make a fair offer to creditors, we will be filing a lawsuit against Barry and DCG imminently… Crucially, the decision to put Genesis into bankruptcy does not insulate [DCG CEO] Barry [Silbert], DCG, and any other wrongdoers from accountability,”

 he posted.

As the cryptocurrency market attempts to recover from last year’s crash, such reports threaten to keep new investors away. 

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Genesis files for bankruptcy, Genesis Global Files for Chapter 11 Bankruptcy after Raking Over $3.5B in Debt

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