Digital Currency Brokerage Genesis Files for Chapter 11 Bankruptcy Digital currency brokerage Genesis announced late Thursday that it has filed for Chapter 11 bankruptcy. Interim CEO Derar Islim said in a statement that the filing was the best way to “preserve assets and create the best possible outcome for all Genesis stakeholders.”
Liquidity and Creditors
Genesis has more than $150 million in cash on hand, which it describes as “ample liquidity” to fund operations during the restructuring process. The entities that filed the Chapter 11 petitions in the Southern District of New York are Genesis Global—a holding company—and lending–focused subsidiaries Genesis Global Capital and Genesis Asia Pacific. The filings include a list of the companies‘ top creditors. While many are unnamed, they include Mirana Corp. of Singapore, Moonalpha Financial Services in Hong Kong, Coincident Capital in the Cayman Islands, Donut, Inc., Switzerland based Altcoinomy, Streami Inc. of Korea, and Heliva International in Panama—each of whom have a reported unsecured claim of $50 million to $150 million.
Background
The filings come after widespread reports of Genesis‘ impending bankruptcy, and a week after the SEC charged the firm and crypto exchange Gemini with violating securities law. Genesis launched the first over–the–counter Bitcoin trading desk in 2013, going on to become one of the industry‘s largest players. More recently, however, headlines associated with the firm involved its public battle with crypto exchange Gemini. Gemini and Genesis had partnered on the Gemini Earn program, and Gemini says Gemini is withholding more than $900 million in customer funds. Gemini Earn was finally terminated two weeks ago.
Restructuring
To navigate the restructuring, Genesis notes in its filing that it has retained four New York law firms: Cleary Gottlieb Steen & Hamilton, Alvarez & Marsal Holdings, Moelis & Company, and Kroll Restructuring Administration. “We have made significant progress refining our business plans to remedy liquidity issues caused by the recent extraordinary challenges in our industry—including the default of Three Arrows Capital and the bankruptcy of FTX,” Islim said. “We seek to implement a path to maximize value and provide the best opportunity for our business to emerge well–positioned for the future.” Paul Aronzon, an independent director at Genesis, added in the announcement that the company has “crafted a deliberate process and roadmap through which we believe we can reach the best solution for clients and other stakeholders.” Genesis’ filing for Chapter 11 bankruptcy is a major development in the digital currency industry. The company’s restructuring process will be closely watched by industry observers, as it could have a major impact on the future of digital currency trading.
