Two months after suspending lending withdrawal on its platform, Genesis Global, the renowned crypto brokerage company has been reeling under the weight of the uncertainties in the digital currency ecosystem and has now filed for Chapter 11 Bankruptcy.
The filing was made in the U.S. Bankruptcy Court of the Southern District of New York and will help the firm in restructuring its business in a bid to provide value for all of its users. According to the firm’s announcement, this was a necessary path to preserve its assets and move its business forward and ultimately provide an optimal outcome for Genesis clients and Gemini Earn users.
Interestingly, the filing covers Genesis Global Holdco, LLC (“GGH”) and two of its lending business subsidiaries, Genesis Global Capital, LLC (“GGC”) and Genesis Asia Pacific Pte. Additionally, the restructuring process will be overseen by members of an independent special committee comprising members of its board of directors.
Genesis Global and its Financial Woes
Recall that early this year, the crypto lender’s financial crisis prompted it to lay off about 30% of its staff which spread across different sections of the company. The New-York based broker has taken a lot of hits as a result of a decline in the crypto market. In August last year, the company’s CEO resigned and 20% of its 260-person employees were slashed as a result of losses tied to the collapse of Three Arrow Capital.
Although the company appealed to its client to be patient as it is doing everything possible to solve the liquidity problem faced by the firm, yet, a lot of factors beyond its control necessitated the filing for bankruptcy. Despite all, the firm’s derivatives and spot trading businesses are still running and meeting the needs of clients.
Reportedly, Genesis Global’s creditors have loans amounting to $1.8 billion and still counting. The debt became known when Gemini Trust Exchange, a digital asset platform, made efforts to recover its $900 million loan for its Earn product investors from Genesis and its parent company Digital Currency Group (DCG).
Filing for bankruptcy has been seen as the most logical way for most companies to maintain continuity in the long run and remain afloat. Besides Genesis Global, Celsius, Voyager Digital, and Three Arrows Capital have also filed for some forms of bankruptcy in the United States.