DCG subsidiary Genesis Global Capital filed for bankruptcy protection in the southern district of New York on Jan 19. Following a massive hit from the recent FTX collapse the lender is the latest firm to fold in the ongoing crypto winter.
Lending Businesses Seek Bankruptcy Protection
News of the filing broke via a press release on Thursday. Per the report Genesis alongside two lending subsidiaries Genesis Global Capital and Genesis Asia Pacific submitted voluntary Chapter 11 applications. This followed rumors that the company would file for bankruptcy if unable to garner enough investor support as it battled liquidity issues.
The affected firms make up the whole of Genesis’ crypto lending operations. These three recorded the worst losses after crypto firms Three Arrows Capital and FTX both imploded. It appears other companies beneath Genesis; its derivatives, spot trading, and custody divisions have been able to stay afloat.
According to the press release, the aforementioned units will continue to function as usual. The publication claims Genesis has over $150M in cash in hand. These funds will function as sufficient liquidity for the company to keep its other businesses running.
Genesis Has Over 100,000 Creditors
The filing revealed liabilities ranging between $1 billion and $10 billion for Genesis. Its assets reportedly sit somewhere within this margin as well. Meanwhile, assets and liabilities belonging to the lender’s subsidiaries rest in the $100 million and $500 million region.
Genesis Global reports that it has over 100,000 creditors. These creditors include key crypto players such as Gemini Trust Company which partnered with Genesis for its Earn program. Genesis’ debt to the company amounts to $766 million.
The lender’s other creditors include crypto fund Mirana, a Bybit investor Genesis owes a whopping $151.5 million. Another creditor is MoonAlpha Finance, the team behind Babel Finance which is owed $150 million. Genesis’ creditors also include VanEck’s New Finance Income Fund and trading firm Cumberland DRW, which are owed $53 million and $18.7 million respectively.
Notably, Genesis’ biggest debts rest with none of the creditors above. The filing failed to disclose the names of several creditors. Among these are two entities Genesis owes $462.2 million and $230 million respectively.
Genesis’ Restructuring Plan
As part of its Chapter 11 filing, Genesis has come up with a plan to restructure and regain stability. This Chapter 11 plan entails the formation of a trust that will handle the distribution of assets to the lender’s creditors.
The plan has two main components, the first of which is to try and sell the company or secure new funding from investors. If this is successful, the trust will use the proceeds to pay off creditors. If a sale or funding cannot be secured, creditors will instead receive ownership stakes in the reorganized company.
Per the release, this “dual-track” process aims to provide a comprehensive solution for all claims. It also intends to pave the way for Genesis to emerge under new ownership. The company will be initiating a marketing and sale process to monetize its assets and raise capital to repay creditors fairly and equitably.