Just a day after discussing bankruptcy terms with creditors, crypto brokerage and lending firm Genesis quickly took the worst possible outcome.
Genesis is officially broken
Specifically, on January 20, 2023, Genesis Global Holdco (GGH), acting as the parent company and two lending subsidiaries, Genesis Global Capital (GGC) and Genesis Asia Pacific (GAP), filed an application. filed for Chapter 11 bankruptcy of the U.S. Bankruptcy Code in Bankruptcy Court for the Southern District of New York.
BREAKING: Cryptocurrency lender Genesis files for bankruptcy, the latest firm to collapse in the aftermath of FTX’s downfall https://t.co/i8ME3PUFjB pic.twitter.com/2zQ9bCLI0h
— Bloomberg Crypto (@crypto) January 20, 2023
This is the expected outcome because of the series of crises stemming from Genesis’ exposure of up to $2.36 billion in funds to the failed investment fund Three Arrows Capital (3AC) in August 2022. , resulting in the company having to lay off 20% of its employees as well as CEO Michael Moro announcing his resignation afterwards.
Not able to stabilize after the above shock, Genesis was strongly affected by the FTX crash, trying to raise $ 1 billion to save the situation but failed. Even Binance also announced that it would not participate in the “rescue” of Genesis at that time, the company was forced to continue to lay off an additional 30% of its staff.
Returning to the main topic, the petition listed in the bankruptcy filing shows that Genesis Global Holdco’s estimated assets and liabilities range from $1 billion to $10 billion.
The largest creditors of Genesis revealed include many well-known companies in the crypto industry, such as Gemini exchange ($765 million), Bybit exchange’s Mirama investment fund ($151 million), Decentraland ($55 million), and Decentraland ($55 million). USD), investment fund VanEck ($53 million), market maker Cumberland ($18 million) and blockchain development organization XLM Stellar Foundation ($13 million).
.@donutapp for $78m
Another one of those CeDeFi lending apps born out of the 0 interest rate and never ending stream of VC money? pic.twitter.com/3vwxQSSHbZ
— Hsaka (@HsakaTrades) January 20, 2023
As part of the bankruptcy filing, Genesis proposed a road map to getting things done by calling for a global framework for all throughput claims and creating a trust that would split the assets. assets to creditors.
The plan envisages a dual tracking process to pursue the sale, capital raise and equitization that will allow the business to emerge under new ownership. The Company will initiate the marketing and sales process to monetize GGH’s assets, using the proceeds from the transaction to pay creditors in a fair and equitable manner.
If the marketing does not result in a sale or capital raise, the creditors will receive an ownership interest in the reorganized GGH. All aspects of this restructuring process will be overseen by an independent special committee of the company’s board of directors.
In addition, Genesis currently has over $150 million in cash that can provide liquidity to support ongoing business operations and facilitate restructuring. In addition, the company has filed a number of other customary petitions with the court to allow daily business operations to continue as usual.
Court approval of these requests is expected in the coming days. New loan acquisitions and initiations in the lending business remain suspended and claims will be resolved through the Chapter 11 process.
Feedback from Gemini
Genesis’ collapse will certainly cause the most confusion for Gemini users because according to some statistics, $900 million worth of money is stuck on Gemini Earn product due to the move to block withdrawals from Genesis. .
However, Gemini CEO Cameron Winklevoss was quick to speak out after Gemini’s announcement that Genesis’ bankruptcy would ensure the legal side that users of the Gemini Earn product could get their money back.
1/ Earn Update: This evening, Genesis Global Capital, LLC (Genesis) filed for bankruptcy under Chapter 11. This is a crucial step towards us being able to recover your assets.
— Cameron Winklevoss (@cameron) January 20, 2023
However, Mr. Cameron Winklevoss is still very adamant that he is ready to sue CEO Barry Silbert and Digital Currency Group (DCG) – the parent company of Genesis and other companies related to Genesis for fraud that has led to the consequences. consequences are as severe as they are now, costing more than 340,000 Gemini users unless Barry Silbert makes a fair, reasonable offer to resolve the situation that is reasonable at this time.
6/ Barry and DCG come to senses and make a fair offer to unless, we will be filing a lawsuit against Barry and DCG imminently.
— Cameron Winklevoss (@cameron) January 20, 2023
The reason Gemini CEO made such a “strong” decision is because both Mr. Barry Silbert and DCG continue to be “ambiguous” in cooperation with Gemini, even though he once issued an “ultimatum” to DCG and Genesis. , and also called for the firing of CEO Barry Silbert.
3/ The good news is that, by seeking the protection of the bankruptcy court, Genesis will be subject to discovery judicial review and be required to provide into the machinations that brought us to this point.
— Cameron Winklevoss (@cameron) January 20, 2023
Synthetic Kyptos
