Crypto Lender Genesis Files for Bankruptcy Following SEC Lawsuit – Featured Bitcoin News

Crypto lender Genesis, a subsidiary of Digital Currency Group (DCG), has filed for Chapter 11 bankruptcy. The filing followed a lawsuit brought by the U.S. Securities and Exchange Commission (SEC). Genesis claims to have “ample liquidity to support its ongoing business operations and facilitate the restructuring process.”

Genesis’ Bankruptcy Filing

Genesis Global Holdco LLC, a prime brokerage subsidiary of venture capital firm Digital Currency Group (DCG), announced Friday that it has voluntarily filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York.

How To Get Free Crypto  

The company’s two lending business subsidiaries, Genesis Global Capital LLC and Genesis Asia Pacific Pte. Ltd., are part of the bankruptcy filing while “other subsidiaries involved in the derivatives and spot trading and custody businesses and Genesis Global Trading are not included in the filing and continue client trading operations,” the announcement clarifies.

“As part of its Chapter 11 filing, Genesis has proposed a roadmap to an exit including a Chapter 11 plan,” the company detailed, adding:

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.

Derar Islim, Genesis’ interim CEO, explained that prior to the bankruptcy filing, the company has been trying to “remedy liquidity issues,” including those caused by the default of crypto hedge fund Three Arrows Capital (3AC) and the collapse of crypto exchange FTX. Islim was appointed to his position last August.

Genesis claims to have more than $150 million in cash on hand that “will provide ample liquidity to support its ongoing business operations and facilitate the restructuring process.” The company has filed motions with the bankruptcy court “to enable day-to-day operations to continue in the normal course.” The announcement adds:

Coinbase Banner  

Redemptions and new loan originations in the lending business remain suspended, and claims will be addressed through the Chapter 11 process.

Repaying Gemini Earn Investors

With a court-supervised restructuring process, Genesis explained that it plans to advance discussions with its creditors and parent company DCG in the hope of reaching “a holistic solution for its lending business, which, if achieved, would provide an optimal outcome for Genesis clients and Gemini Earn users.”

Genesis and crypto exchange Gemini have been in a feud over Gemini’s crypto lending program, Earn. Genesis froze withdrawals last November while holding approximately $900 million in investor assets from more than 340,000 Gemini Earn investors.

Gemini co-founder Cameron Winklevoss stated on Twitter Friday that Genesis’ bankruptcy filing “is a crucial step” towards Earn customers being able to recover their assets. However, he noted, “Crucially, the decision to put Genesis into bankruptcy does not insulate Barry [Silbert], DCG, and any other wrongdoers from accountability,” elaborating:

We have been preparing to take direct legal action against Barry, DCG, and others who share responsibility for the fraud that has caused harm to the 340,000+ Earn users and others duped by Genesis and its accomplices.

“Unless Barry and DCG come to their senses and make a fair offer to creditors, we will be filing a lawsuit against Barry and DCG imminently. We also believe that — in addition to owing creditors all of their money back — Genesis, DCG, and Barry owe them an explanation. Bankruptcy court provides a much-needed forum for that to happen,” the Gemini co-founder concluded.

FreeBitcoin Banner  

Last week, the U.S. Securities and Exchange Commission (SEC) charged both Gemini and Genesis Global Capital “for the unregistered offer and sale of securities to retail investors through the Gemini Earn crypto asset lending program.”

Tags in this story

What do you think about Genesis filing for bankruptcy? Let us know in the comments section below.

Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Read disclaimer

Go to Source
Author: Kevin Helms

Recommended Crypto Services, Products and Strategies:

The first thing any crypto investor needs is is a reliable and secure Crypto Wallet.  Whether you’re looking for an online wallet, hardware wallet, desktop or mobile wallet, Crypto Renegade provides you with all the Best Crypto Wallets in each category.

Best Crypto Wallets Banner

When you’re ready to buy more crypto, or exchange your coins for others, Crypto Renegade’s list of the Best Crypto Exchanges has you covered.  The Crypto Exchanges recommended here offer everything from simplicity and convenience to advanced trading platforms and profit sharing. 

Best Crypto Exchanges Banner

If you want to learn more about the methods and tools that can be used to find Great Crypto Projects, then be sure to check out Crypto Renegade’s strategy for How To Find The Best Cryptocurrency.

Crypto Strategy Banner

For those people that don’t have any money to invest right now, or just want to understand the technology a bit more, you’ll definitely want to check out Crypto Renegade’s Free Crypto Strategy and start collecting Free Coins today!

Free Crypto Banner

What do you think about cryptocurrency? Do you have any questions about it? Be sure to leave a comment below.

This site uses Akismet to reduce spam. Learn how your comment data is processed.