US-based cryptocurrency firm Genesis has filed for bankruptcy protection as it looks to restructure its lending business.
In a statement, the firm says: “Genesis Global Holdco, LLC (GGH) and two of its lending business subsidiaries, Genesis Global Capital, LLC (GGC) and Genesis Asia Pacific Pte. Ltd. (GAP), filed voluntary petitions under Chapter 11 of the US Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York”.
It adds that its other subsidiaries “involved in the derivatives and spot trading and custody businesses and Genesis Global Trading are not included in the filing and continue client trading operations”.
The Guardian reports the company has listed over 100,000 creditors in its bankruptcy filing, with assets and liabilities in the range of $1 billion to $10 billion.
Speaking on the announcement, Genesis interim CEO Derar Islim says: “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 Genesis stakeholders.”
As part of its Chapter 11 filing, Genesis says it has proposed a plan which “contemplates a dual track process in pursuit of a sale, capital raise and/or equitisation transaction that would enable the business to emerge under new ownership”.
“The company will initiate a marketing and sale process to monetise GGH’s assets or otherwise raise capital, using the transaction proceeds to pay creditors fairly and equitably,” it adds.
Genesis says it has more than $150 million in cash available “which will provide ample liquidity to support its ongoing business operations and facilitate the restructuring process”.
Last week, the US Securities and Exchange Commission (SEC) charged Genesis along with crypto firm Gemini over what the regulator calls “the unregistered offer and sale of securities to retail investors through the Gemini Earn crypto asset lending program”.
The SEC claims around 340,000 Gemini Earn investors have been unable to withdraw funds after Genesis suspended withdrawals in November last year following the fallout from the FTX collapse.
Gemini co-founder Tyler Winklevoss responded by saying the SEC’s behaviour is “totally counterproductive“, adding Gemini and other creditors are “working hard together to recover funds”.
He writes: “We look forward to defending ourselves against this manufactured parking ticket. And we will make sure this doesn’t distract us from the important recovery work we are doing.”
In response to Genesis’ bankruptcy filing, Gemini co-founder Cameron Winklevoss says the move “marks an important milestone in our efforts to help Earn users get their assets back”.