Genesis Global Holdco, Genesis Global Capital, LLC, and Genesis Asia Pacific Pte. Ltd has joined other renowned crypto companies to file for bankruptcy protection in the Southern District Court of New York after being exposed to the collapse of the bankrupt FTX Exchange and Three Arrows Capital (3AC).
A Press Release from the firm revealed that Genesis’ derivatives and spot trading, broker-dealer, and custody businesses are unaffected by the Chapter 11 bankruptcy protection and will continue to serve clients.
In November, Genesis announced that its loan division would temporarily halt customer redemption due to heavy withdrawals stemming from the unrest caused by the defunct FTX, which left the company with limited liquidity.
As part of the bankruptcy process, the firm has initiated a solution plan which includes the pursuit of a sale through marketing, capital financing, or an equity transaction that would allow the company to take on new ownership. However, if the sale becomes unsuccessful, creditors will be given ownership stakes in the reorganized GGH.
The report also noted that Genesis now has more than $150 million in cash, which will allow the company to carry on with business as usual. As a result, The company is currently waiting for a court decision to allow it to carry out everyday activities while going through the bankruptcy process.
Gemini’s Exposure to Genesis Capital
It was earlier revealed that Genesis owed its debtors about $1.8 million, but its debt is now known to exceed $3.5 billion. This money includes the $900 million the firm owed to a group of Gemini customers in the Gemini Earn program.
Barry Silbert, founder of Digital Currency Group (DCG), the parent company of Genesis hinted that the loan was made after DCG assumed Genesis’ risk from the Three Arrows Capital default.
In January, Genesis and DCG were accused by Gemini users of hiding bankruptcy status from its investors. As a consequence, a class action was issued against the lending firm. The claimants also alleged that Genesis and DCG converted $2.3 billion in debt owed by the bankrupt Three Arrows Capital into a $1.1 billion promissory note with a 10-year maturity.
Gemini eventually decided to terminate the loan agreement between its clients and Genesis, after a long-spanning disagreement between the founders of both companies. Consequently, Gemini demanded that Genesis refund all unclaimed assets from the scheme while notifying its Earn users via official emails.
