Genesis Global, a subsidiary of Digital Currency Group (DCG), filed for Chapter 11 bankruptcy protection on January 19 in bankruptcy court for the Southern District of New York, it said in a press release.
The derivatives, spot trading, brokerage and custodial arms of Genesis are not part of the bankruptcy filing and are operating normally, the firm said.
Restructuring
Under Chapter 11, the firm is considering the restructuring, which will be led by a special committee independent of the board of directors, he said.
The firm has between $1 billion and $10 billion in assets and liabilities, according to the Press release. Genesis said it has more than $150 million in cash, providing “ample liquidity” to support its business operations and restructuring process.
The court-supervised restructuring “will provide an optimal outcome for Genesis clients and Gemini Earn users,” the firm said. Genesis owes $900 million to Gemini Earn users.
The crypto lender is exploring a “two-way process” to carry out a “sale, capital increase and/or acquisition transaction that would allow the business to emerge under new ownership,” it said.
Genesis will initiate a process of marketing and selling its assets or raise capital and use the proceeds to pay off creditors. However, if the company fails to close a sale or raise capital, creditors will receive ownership interests in Reorganized Genesis Global, according to the press release.
The firm had been trying to raise capital for months to no avail. Its parent company, DCG, was reportedly considering liquidating its venture capital holdings to cover Genesis’ $3 billion debt burden.
Genesis froze client withdrawals in November, shortly after FTX collapsed. Earlier this month, the firm cut its workforce by 30%.
