Crypto Lender Genesis on Brink of Bankruptcy Amid Liquidity Crisis
Crypto lender Genesis Global Capital is facing severe financial troubles. It's negotiating with creditors to resolve a liquidity crisis, and is reportedly preparing to file for bankruptcy as soon as this week.
Genesis' woes began in July when crypto hedge fund Three Arrows Capital defaulted on a $2.4 billion loan. Genesis filed a $1.2 billion claim against the fund, which was later assumed by Digital Currency Group. The situation worsened in November following the collapse of crypto exchange FTX, leading Genesis to pause withdrawals on its Gemini Earn program.
In recent months, Genesis has laid off 30% of its staff and seen at least a half-dozen high-level executives leave their positions between August and October. The company is now discussing a prepackaged bankruptcy plan with creditors. The bankruptcy proceeding will be led by a U.S. bankruptcy judge, typically appointed in the jurisdiction where the case is filed, often in New York.
Investors are still awaiting their more than $900 million in assets from Gemini Earn. Meanwhile, the SEC has charged both Genesis and Gemini with selling unregistered securities. Genesis' future remains uncertain as it navigates these challenges.
