The Nightmare Has Come True: This Cryptocurrency Company Has Gone Bankrupt!

Troubled cryptocurrency lender Genesis Trading has filed for Chapter 11 bankruptcy protection. Here are the details…
 The Nightmare Has Come True: This Cryptocurrency Company Has Gone Bankrupt!
READING NOW The Nightmare Has Come True: This Cryptocurrency Company Has Gone Bankrupt!

Genesis Global Holdco LLC, the parent company of troubled cryptocurrency lender Genesis Global Capital, has filed for Chapter 11 bankruptcy protection after the two biggest industry crashes of 2022. Here are the details…

Cryptocurrency company Genesis has finally filed for bankruptcy

Genesis Global Holdco, LLC and its subsidiaries Genesis Asia Pacific Pte. Ltd and Genesis Global Capital, LLC filed three voluntary petitions with the bankruptcy court. All three are under the umbrella of the Digital Currency Group (DCG). Genesis took action for joint management of cases. Genesis Global Capital, a partner company of Gemini’s now-defunct Earn program, estimated more than 100,000 creditors and between $1 billion and $10 billion in debt and assets in its filing. The other two organizations estimated their assets and liabilities in the $100 million and $500 million range, respectively.

These companies include Genesis’ crypto lending business, which was rocked by the explosions of hedge fund Three Arrows Capital and crypto exchange FTX last year. According to a press release, Genesis’s other subsidiaries engaged in derivatives and spot trading and custody, and Genesis Global Trading are not included in the documents and ongoing client trading operations. Genesis said it expects money to remain throughout the restructuring process to pay unsecured creditors.

What had happened?

As we reported on cryptocoin.com, shortly after FTX filed for bankruptcy of its own in November, Genesis Global Capital was forced to suspend the Winklevoss twins’ customer withdrawals, which harmed customers from a yield product offered by crypto exchange Gemini. Genesis was struggling to raise new capital or reach a settlement with creditors. It was also under increasing pressure, along with Digital Currency Group (DCG), to make a profit on $900 million in locked deposits.

Before dealing a blow to FTX Genesis; The failure of crypto hedge fund Three Arrows Capital had cost the firm hundreds of millions of dollars. Also earlier this month, Genesis announced that it had cut 30 percent of its staff to 145 employees. Late last year, Genesis hired investment bank Moelis & Co. to help explore options. According to some experts, the bankruptcy filing could have broader implications for Bitcoin, as DCG is the parent company of Genesis and crypto-assets manager Grayscale.

Grayscale operates the Grayscale Bitcoin Trust (GBTC), which has more than $10 billion in assets under management and traded at a record discount to net worth late last year, but that discount has narrowed recently. There are market fears that the repercussions of the Genesis bankruptcy may somehow lead to the liquidation of more than 600,000 Bitcoin holdings of GBTC.

Statement from Cameron Winklevoss

Gemini’s Cameron Winklevoss tweeted shortly after the bankruptcy filing was announced. In the tweet, the CEO of Digital Currency Group threatened to sue Barry Silbert for non-repayment of a $900 million loan. The tweet comes after Winklevoss’ exchange launched a Twitter war against DCG to get back the credit amid its own struggles. Winklevoss described the lender’s bankruptcy as a “significant step” towards saving Gemini users’ assets. However, Silbert and Genesis’ parent company plans to sue DCG if Silbert doesn’t make a “fair offer” to its creditors.

“We prepare to take direct legal action against Barry, DCG, and others who share responsibility for the scam that harmed more than 340,000 Earn users and others deceived by Genesis and its accomplices,” Winklevoss wrote. This latest series of tweets follows a weeks-long argument between Winklevoss and Silbert over the repayment of Gemini’s $900 million loan to Genesis.

Cryptocurrency companies are in trouble

Amid the public debate, Winklevoss called for Silbert’s removal from DCG, alleging that Silbert had mixed funds among the multiple companies he managed and employed “malicious distraction tactics” while trying to remember Gemini’s millions. However, in its voluntary petition for Chapter 11 bankruptcy, Genesis Global Capital disputed Gemini’s claim. Genesis pointed out that the $900 million loan is net proceeds from foreclosures of certain assets.

In his recent tweets, Winklevoss also reiterated previous allegations that Silbert had not cooperated with Gemini to devise a plan to repay the loan. Genesis’ bankruptcy announcement comes at a time when both companies are in dispute with regulators. As we reported on Cryptokoin.com, the US Securities and Exchange Commission (SEC) claimed that Gemini and Genesis were selling unregistered securities in a lawsuit filed last week.

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