Genesis prepping to file bankruptcy: report

Finance

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Crypto lender Genesis Global Capital is preparing to file bankruptcy as soon as this week, Bloomberg has reported, citing people familiar with the situation.

The firm, a subsidiary of Digital Currency Group, has been in negotiations with various creditor groups to remedy a liquidity crunch, according to Bloomberg.

Genesis has had a rough year, starting with crypto hedge fund Three Arrows Capital defaulting on a $2.4 billion loan from the firm in July following the Terra ecosystem collapse. Genesis filed a $1.2 billion claim against the insolvent firm later that month, which DCG assumed in entirety.

From August to October, at least a half-dozen high level Genesis executives vacated their positions.

Then, prompted by the far-reaching implosion of crypto exchange FTX in November, Genesis paused withdrawals on its now-defunct Gemini Earn, which it ran in conjunction with Winklevoss-twin-owned exchange Gemini.

Investors have yet to get their more than $900 million in assets back, and last week, the Securities and Exchange Commission charged both firms with selling unregistered securities.

Earlier this week, Genesis laid off 30% of its staff.

A separate report from The Block on Wednesday said that Genesis is discussing a prepackaged bankruptcy plan with creditors, meaning the sides would land on a restructuring agreement prior to any official filing.

The deal would then be finalized in bankruptcy court, The Block reported.

Neither Genesis nor DCG returned Banking Dive’s request for comment.

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