Genesis seeks Chapter 11 bankruptcy protection

Genesis Global Holdco LLC, a US-based cryptocurrency firm, and two of its lending subsidiaries, Genesis Global Capital LLC and Genesis Asia Pacific Pte. Ltd., have filed for bankruptcy protection in a New York court. According to the firm, other subsidiaries involved in the derivatives, spot trading and custody businesses, as well as Genesis Global Trading, are not affected by the filing and are still conducting client trading operations. The company has reportedly listed over 100,000 creditors in its bankruptcy filing, with assets and liabilities estimated to be between $1 billion to $10 billion.

Interim CEO of Genesis, Derar Islim, stated that the in-court restructuring is the best way to preserve assets and create the best outcome for all stakeholders. Genesis has also proposed a plan that would enable the business to emerge under new ownership through a dual track process, which may include a sale, capital raise or equitisation transaction. The company says it has more than $150 million in cash available, which will provide ample liquidity to support its operations and restructuring process.

Last week, the US Securities and Exchange Commission (SEC) charged both Genesis and cryptocurrency firm Gemini for allegedly unregistered offer and sale of securities to retail investors through the Gemini Earn crypto asset lending program. The SEC claims that around 340,000 Gemini Earn investors have been unable to withdraw funds after Genesis suspended withdrawals in November last year following the FTX collapse.

Gemini co-founder Tyler Winklevoss called the SEC’s behavior “totally counterproductive” and stated that the firm and other creditors are working together to recover funds. He added that they are looking forward to defending themselves against the SEC’s charges. Cameron Winklevoss, the other co-founder of Gemini, said that the bankruptcy filing by Genesis marks an important milestone in the efforts to help Earn users recover their assets.