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Genesis Global Capital Aims for Bankruptcy Resolution

Genesis Global Capital seeks to resolve creditor disputes and emerge from bankruptcy by May, amidst legal challenges and asset auctions.
Published on 2023-01-24

Genesis Global Capital's Bankruptcy Strategy

Genesis Global Capital, a cryptocurrency lender, is working towards resolving disputes with creditors to emerge from Chapter 11 bankruptcy by late May. The company, a subsidiary of Barry Silbert's Digital Currency Group (DCG), filed for bankruptcy on January 19 after freezing customer withdrawals following the collapse of FTX. The move came amid a series of bankruptcies in the crypto lending sector, including Celsius Network, Voyager Digital, and BlockFi.

Progress in Creditor Negotiations

During a hearing in Manhattan, Genesis' lawyer expressed optimism about resolving creditor disputes soon. If necessary, mediation might be pursued. Creditors, holding claims of $1.5 billion, are reportedly nearing an agreement. The bankruptcy court has approved initial motions, allowing Genesis to pay employees and critical vendors, while maintaining customer privacy by not disclosing creditor names.

Asset Auctions and Financial Obligations

Genesis plans to auction various assets and aims to exit bankruptcy by May 19. The company reported assets and liabilities of over $5 billion and owes more than 100,000 creditors at least $3.4 billion. It holds claims of nearly $1.7 billion against its parent company, DCG. However, Genesis' bankruptcy does not affect DCG or its other businesses, including Grayscale and CoinDesk.

Legal Challenges with Gemini

Genesis is embroiled in a legal dispute with Gemini, its largest creditor, owed $765.9 million. The U.S. Securities and Exchange Commission charged Genesis and Gemini over unregistered securities sales. The Winklevoss twins, who run Gemini, demand repayment of $900 million owed to Earn investors and have called for Silbert's removal.

Broader Implications

In addition to Gemini, Genesis' borrowers include hedge fund Three Arrows Capital and Alameda Research, both undergoing bankruptcy. These developments highlight the interconnected challenges faced by entities in the cryptocurrency industry.

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