Genesis intends to file for bankruptcy
A subsidiary of the crypto conglomerate Digital Currency Group, the lending company for cryptocurrencies Genesis Global Capital, is apparently getting ready to declare bankruptcy as soon as this week.
Genesis earlier stated that it was considering filing for bankruptcy if it were unable to obtain money due to a liquidity crisis, a condition that was similar to that which preceded crypto exchange FTX’s Chapter 11 filing in November, according to a Jan. 18 Bloomberg report. According to Bloomberg, who cited sources with knowledge of the matter, Genesis might declare bankruptcy as soon as this week.
The news came after the US Securities and Exchange Commission sued Genesis and cryptocurrency exchange Gemini for selling unregistered securities through Gemini’s “Earn” program on January 12. The case is still open.
Cameron Winklevoss, the co-founder of Gemini, has also written a number of open letters on social media criticizing Digital Currency Group CEO Barry Silbert and asserting that Genesis is owed $900 million by Gemini for money that Gemini lent to it as part of the same program. Winklevoss’ claims, according to DCG, are “malicious, false, and defamatory charges.”
The collapse of the cryptocurrency venture capital firm Three Arrows Capital in 2022 may be the cause of many of the alleged liquidity problems. In January, Silbert informed the company’s stockholders that Three Arrows owed Genesis $447.5 million as well as 4,550 Bitcoin, which was valued at around $78 million at the time. Prior to its bankruptcy in November, Genesis also had over $175 million on FTX, which is likely what contributed to the company’s cash flow problems and reports of possible insolvency. Genesis stopped accepting withdrawals after FTX went bankrupt.
Genesis stopped accepting withdrawals when FTX declared bankruptcy. The company would be the latest to fail after Terraform Labs, Voyager Digital, Celsius Network, Three Arrows Capital, FTX, and BlockFi. Should the company also declare bankruptcy, this would be the case.
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