Genesis, the US-based crypto lender that has been struggling to keep up with the financial challenges of the ongoing crypto winter, filed for bankruptcy in New York’s Southern District on Thursday. The company had announced that it would halt withdrawals in November after the crypto slump deepened following the dramatic downfall of crypto exchange FTX. Between October 2022 and January 2023, the crypto industry has lost over US$200 billion (approximately Rs.16,23,571 billion) in value due to repeated project failures and the exit of several investors.
The company says it has both liabilities and assets ranging from US$1 billion (around Rs8,120 billion) to US$10 billion (around Rs81,200 billion). genesis also claims to have over $150 million (approximately Rs.1,218 crore) in cash.
In a press release, the company said it was filing its decision bankruptcy has been carefully considered and serves as the first step in its restructuring process.
“As part of its Chapter 11 filing, Genesis has proposed an exit roadmap that calls for a framework for a global resolution of all claims by and the creation of a trust that distributes assets to creditors. The plan provides for a two-pronged process to pursue a sale, capital raising and/or equity transaction that would allow the company to emerge under new ownership.” release said.
In its next move, Genesis aims to raise capital by embarking on a marketing and sales process to monetize its assets. According to the company, the proceeds collected will be used to compensate creditors.
“If the commercialization process does not result in a sale or capital increase, creditors will receive ownership interests in the reorganized Genesis Global Holdco,” the post reads. In the meantime, the Genesis board of directors will act as an independent select committee overseeing the company’s restructuring process going forward.
Following collapse of FTX Due to a liquidity crisis, Genesis and its parent company Digital Currency Group (DCG) owed Gemini crypto clients exchange US$900 million (approximately Rs.7,350 crore).
Burdened by the market situation, Genesis had announced staff layoffs to keep the business going. In November, Genesis was struggling to raise funds and was therefore struggling warned potential investors that it may have to file for bankruptcy if its efforts go unheeded.
