Genesis Global, the lending unit of cryptocurrency conglomerate Digital Currency Group, officially filed for bankruptcy protection last Thursday.
The first court hearing in the bankruptcy case of Genesis Global and two of its subsidiaries is scheduled for today at 14:00 p.m. EST in the Bankruptcy Court for the Southern District of New York. The judge in charge of the bankruptcy case will be Sean H. Lane, according to court documents cited by various media.
Genesis Global said that is considering a restructuring to respond to its clients and investors, including those in the Gemini Earn performance program. The company has appointed a special committee and assured that it has $150 million in cash to support said restructuring.
For now, Genesis Global Holdco and its subsidiaries Genesis Global Capital LLC and Genesis Asia Pacific Pte. Ltd filed for bankruptcy. The company's other subsidiaries, including Genesis Global Trading, are not listed in the Chapter 11 bankruptcy filing and continue operations as normal, the company said.
The financial problems faced by Genesis Global since the collapse of Three Arrows Capital, due to the fall of Terra in May and FTX and Alameda Research in November, led to its bankruptcy. As reported by this media, on the night of Thursday, January 19, the cryptocurrency lending subsidiary of Digital Currency Group (DCG) filed for Chapter 11 protection.
In November 2022, after the bankruptcy of FTX and its investment arm, Genesis Global flatly denied any plans to file for bankruptcy, highlighting the possibility of reaching amicable agreements with its creditors and raising funds to cover its deficit and sustain its operations. However, according to Bloomberg, the company had difficulty raising the necessary funds.
DCG owes Genesis $1.650 billion
Amid the crisis, Genesis Global's interim CEO and COO, Derar Islim, has removed his Twitter account. However, Islim told CNBC in a statement that they were in dialogue with his parent company, Digital Currency Group, to reach an agreement.
According to reports, DCG owes Genesis approximately $1.650 billion. The debt was generated from several loans that the company granted to DCG to take advantage of investment opportunities that have not yet been disclosed. However, one of the loans, for $526 million, matures next May, while $1.100 billion was granted under a promissory note maturing in 2032.
On the other hand, Genesis Global had lent Three Arrows Capital, which filed for bankruptcy in July 2022, more than $2.300 billion while the company has assets worth $175 million dollars in their accounts at FTX.
As a result of the default, Genesis owes its creditors nearly $3.000 billion. Among them, Genesis Global's main creditor is the Gemini cryptocurrency platform, which claims $766 million from DCG's crypto loan manager.
To remedy these debts, DCG and its CEO, Barry Silbert, are considering selling part of their assets, such as the newspaper CoinDesk, for which the creator of Cardano, Charles Hoskinson made an offer of $200 million.
Digital Currency Group is the parent company of other major companies in the crypto industry, such as Grayscale Investments, TradeBlock, Foundry Services and Luno Global.
Continue reading: DCG's Genesis Global Capital could declare bankruptcy this week
