Genesis Global Holdco (GGH), the parent company of the cryptocurrency lending company Genesis Global Capitalhas filed for bankruptcy in the United States.
The company, Genesis Global Capital and its other lending subsidiary, Genesis Asia Pacific, filed voluntary petitions under Chapter 11 of the US Bankruptcy Code in the Bankruptcy Court for the Southern District of New York, he said.
GGH said its executives and advisers have been engaged in ongoing and productive discussions with its creditors and corporate parent Digital Currency Group to assess the most effective path to preserve assets and move the business forward.
DCG also owns CoinDesk, a cryptocurrency-focused media company.
โGenesis has now commenced a court-supervised restructuring process to further advance these discussions and reach a holistic solution for its lending business that, if achieved, would provide an optimal outcome for Genesis clients and Gemini Earn users. the company said.
Its other subsidiaries in the derivatives, spot trading and custody businesses, as well as Genesis Global Trading are not included in the presentation and continue to do business with clients.
Genesis Global Capital suspended withdrawals in November, shortly after the collapse of Sam Bankman-fried's FTX cryptocurrency exchangewhere he had some of his funds.
FTX International and its trading house Alameda Research were independent profitable businesses in 2021, each making billions. Alameda then lost about 80 percent of its asset value over the course of 2022 due to a series of market crashes. FTX was also affected by the fall of Alameda.
Earlier this month, the US Securities and Exchange Commission filed charges against Genesis Global Capital for the unregistered offering and sale of securities to retail investors through its Gemini Earn crypto asset lending program.
He SECOND said Genesis raised billions of dollars in cryptocurrency assets from hundreds of thousands of investors through this unregistered offering.
In July, the $10 billion Singapore-based cryptocurrency hedge fund Capital of the three arrows collapsed and declared bankruptcy.
This prompted Genesis Global Trading to file a $1.2 billion claim against Three Arrows Capital, now insolvent.
Genesis' lending unit said in its US court filing on Thursday that it had assets and liabilities in the range of $1 billion to $10 billion.
As part of its Chapter 11 filing, Genesis said it proposed a roadmap for an exit that calls for a framework for a global resolution of all claims through a trust that will distribute assets to creditors.
โThe plan contemplates a two-way process in search of a sale, capital increase and/or acquisition transaction that would allow the business to emerge under new ownership,โ he said.
โThe company will initiate a marketing and sales 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 increase, the creditors will receive ownership interests in GGH Reorganized."
The restructuring process will be overseen by a special independent board committee, the company said. Genesis Global Holdco said it had $150 million in cash to support the restructuring.
โWhile we have made significant progress in refining our business plans to address liquidity issues caused by recent extraordinary challenges in our industry, including the Three Arrows Capital default and the FTX bankruptcy, a restructuring in court files the most effective pathway through which to preserve assets and create the best possible outcome for all Genesis stakeholders,โ said Derar Islim, interim CEO of Genesis.
โWe deeply appreciate our clients' continued patience and cooperation as we work toward an equitable settlement,โ said Mr. Islim, who was appointed to the role in August 2022.
Moelis & Company is acting as financial advisor to the company, while Cleary Gottlieb Steen & Hamilton is acting as legal advisor and Alvarez & Marsal is acting as restructuring advisor.
Updated: January 20, 2023, 6:52 am
