Genesis Global is a financial services company that specializes in digital assets and blockchain technology. The company operates through its subsidiaries, including Genesis Global Trading, which provides institutional clients with collateralized loans and OTC trading services for digital assets such as Bitcoin and Ethereum.
Additionally, Genesis Capital, which is also a subsidiary of Genesis Global, is a digital currency lending firm that offers lending and borrowing solutions for institutional and high-net-worth clients. Genesis Global was founded in 2013 and is headquartered in New York City.
Genesis, a leading crypto lending company, has taken the drastic step of filing for Chapter 11 bankruptcy protection in the Southern District of New York, due to its staggering estimated liabilities of $1 billion to $10 billion, as stated in the Jan. 19 filing.
Reports had surfaced previously that the company had been exploring options to raise capital in an effort to alleviate a liquidity crisis, but unfortunately, it wasn’t enough to save the company from filing for bankruptcy.
The filing also revealed that the assets of the company were also in the same range. This is a significant development in the crypto lending space and it would be interesting to see how it unfolds.
According to the company’s Chapter 11 filing, it is considering a “dual track process” that would involve pursuing a “sale, capital raise, and/or an equitization transaction” to enable the business to continue operating under new ownership.
According to the company’s statement, the Chapter 11 proceedings will not include its derivatives, spot trading, broker-dealer, and custody businesses and they will continue to function as usual.
Genesis also mentioned that it has an abundant liquidity position, with over $150 million in cash on hand, which the company believes would be more than sufficient to support its ongoing operations and enable a smooth restructuring process.
This is a positive development for the company’s clients who use these services and it would be interesting to see how the company uses this cash to navigate through the bankruptcy process.
The restructuring process of Genesis will be led by an “independent special committee” of the company’s board of directors, which is specifically created to ensure the best outcome for Genesis clients and users of Gemini Earn.
The company had to suspend withdrawals from its platform in November 2022, due to the market turbulence caused by the collapse of FTX, which had an adverse effect on the users of Gemini Earn, a yield-bearing product for users of the Gemini cryptocurrency exchange, which is managed by Genesis. The company said it is taking this step to protect the interest of its clients and users of the Gemini Earn product.
The United States Securities and Exchange Commission (SEC) has filed charges against both Genesis and Gemini for allegedly offering unregistered securities through the Earn program.