Barry Silbert, Founder and CEO of Digital Currency Group
David A. Grogan | CNBC
Cryptocurrency lender Genesis filed for Chapter 11 bankruptcy protection in Manhattan federal court late Thursday night. This is the latest casualty of the industry contagion caused by the collapse of FTX, a devastating blow to the business that was once central to Barry Silbert’s Digital Currency Group.
The company lists more than 100,000 creditors in its “mega” bankruptcy filing, with total liabilities ranging from $1.2 billion to $11 billion, according to bankruptcy filings.
Three separate petitions have been filed against the Genesis holding company. In a statement, the company said the two companies are only involved in Genesis’ cryptocurrency lending business. As with Genesis Global Trading, the company’s derivatives and spot trading businesses will continue unimpeded.
“We are exploring avenues to maximize value and provide the best opportunities for our business to be well-positioned for the future,” said Dellal Islim, Interim CEO of Genesys. We look forward to advancing our dialogue with DCG and our creditor advisors as we do so,” the statement said.
The filing follows months of speculation about whether Genesis will go into bankruptcy protection and comes just days after being approved by the Securities and Exchange Commission. filed a lawsuit against Genesis and its former partner Gemini over an unregistered offering and sale of securities.
Genesis listed a $765.9 million loan from Gemini in its bankruptcy filing Thursday. Other sizable claims included his $78 million loan from Donut, a high-yield decentralized platform, and the VanEck fund, which includes a $53.1 million loan.
Gemini co-founder Cameron Winklevoss initially reacted to the news on Twitter, writing that Silbert and DCG “continue to refuse to offer creditors a fair deal.”
“We have been preparing to take direct legal action against Barry, DCG and others,” he continued.
“Sunlight is the best disinfectant,” concluded Winklevoss.
Genesis is in talks with creditors represented by law firms Kirkland & Ellis and Proskauer Rose, a source familiar with the matter told CNBC.Bankruptcy places Genesis alongside other collapsed crypto exchanges including block phiFTX, CelsiusWhen Voyager.
Collapse of FTX It froze the market in November and customers across the crypto industry started asking for withdrawals.of The Wall Street Journal reported Following the FTX meltdown, Genesis sought $1 billion in emergency relief, but found no stakeholder. His DCG, the parent company that owes him more than $3 billion to creditors, suspended dividends this week. CoinDesk reported.
Genesis provided loans to crypto hedge funds and over-the-counter companies, but last year saw a series of bad bets seriously harmed the lender and extorted it Withdrawal stop on November 16th.
A New York-based company offers crypto loans to Three Arrows Capital (3AC) and Alameda Research are hedge funds started by Sam Bankman-Fried and closely associated with his FTX exchange.
3AC filing for bankruptcy July in the midst of “Crypto Winter”. According to court filings, Genesis lent his 3AC $2.3 billion worth of his assets. 3AC’s creditors have fought in court to reclaim a fraction of the billions of dollars once controlled by hedge funds.
Alameda, on the other hand, was integral to the eventual demise of FTX. Bankman-Fried is denied many times We have knowledge of his company’s misbehavior within the web, but are unable to provide any substantive explanation as to why. billion dollar holeHe was arrested in December and released on a $250 million bail ahead of a trial scheduled to begin in October.
Genesis had $2.5 billion exposure to Alameda, but its position was Closed in August. After FTX filed for bankruptcy in November, Genesis said about $175 million worth of Genesis assets were “locked” to FTX’s platform.
Genesis’ financial spiral exposed Silbert’s wider DCG empire. The parent company was forced to take over Genesis’ $1 billion in debt stemming from 3AC’s bankruptcy.In a subsequent letter to investors, Silbert said: disclosed An additional $575 million loan from Genesys to DCG for private investment purposes.
A listed company that pioneered DCG trustallowing investors to hold Bitcoin and other currencies directly in their portfolios without having to expose them publicly. Grayscale Bitcoin Trust Greater discount to net asset value Significantly Confidence in conglomerates has waned in the last year.
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