Not long ago, Live Bitcoin News reported that Genesis Global Capital – the lending division of the Digital Currency Group (DCG) – was preparing for bankruptcy. While it looked like the situation was inevitable, it was believed that there was potentially a small chance that the company was going to be able to survive its present ordeal. Sadly, it doesn’t look like that’s going to happen now as the firm has proceeded with its bankruptcy filing.
Genesis Files Bankruptcy
The company explained in a recent statement:
Genesis has now commenced a court-supervised restructuring process to further advance these discussions and reach a holistic solution for its lending business, which, if achieved, would provide an optimal outcome for Genesis clients and Gemini Earn users.
The company is working on preserving the few assets it still has and is working with creditors to see about how best to do this. One of the methods that has been proposed is a trust fund of sorts that gradually distributes whatever’s left to creditors to ensure they are paid what they’re owed in due time. The company continued its statement with:
The plan contemplates a dual track process in pursuit of a sale, capital raise, and/ or equitization transaction that would enable the business to emerge under new ownership. The company will initiate a marketing and sale process to monetize GGH’s assets or otherwise raise capital, using the transaction proceeds to pay creditors fairly and equitably. If the marketing process does not result in a sale or capital raise, creditors will receive ownership interests in reorganized GGH.
Derar Islim – the interim chief executive of Genesis – also threw his two cents into the mix, commenting:
While we have made significant progress refining our business plans to remedy liquidity issues caused by the recent extraordinary challenges in our industry, including the default of Three Arrows Capital and the bankruptcy of FTX, an in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all Genesis stakeholders. We deeply appreciate our clients’ ongoing patience and partnership as we work towards an equitable solution.
The bankruptcy of Genesis largely stems from the bankruptcy of Three Arrows Capital, which occurred in the summer of last year. The company helped Genesis organize what the Securities and Exchange Commission (SEC) considered an unregistered token offering. That agency has now filed suit against the bankrupt endeavor.
This Goes Back to Last Year
Both firms were able to raise quite a bit of money for Genesis’ operations, but when Three Arrows was forced into bankruptcy, Genesis had no choice but to file a $1.2 billion claim against it.
2022 was a year devoted to crypto bankruptcies given how many other enterprises – from Celsius to FTX – were forced into court liquidation proceedings.