Creditors of troubled crypto brokerage firm Genesis have loans that amount to $1.8 billion. While this is a huge figure, there is the likelihood that it is still growing.
Notably, Genesis halted withdrawal on its platform in Mid-November following the implosion of the FTX Derivatives Exchange. Some of Genesis creditors who intend to avoid a bankruptcy filing like in the case of FTX are already seeking legal advice from Proskauer Rose, a law firm.
Discussions about Genesis debt were voiced when digital asset platform Gemini Trust Exchange made efforts to recover its $900 million loan for its Earn product investors from the ailing crypto firm and its parent company Digital Currency Group (DCG). As part of its efforts, Gemini organized a creditors committee to help recoup the fund. The Gemini customers have legal representation from Latham & Watkins.
Therefore, Gemini Earn product fund together with another $900 million owed to the creditors seeking legal advice from Proskauer Rose, amount to $1.8 billion. Before now, Genesis’s balance sheet showed that the firm had $2.8 million in outstanding loans including the one owed by its parent firm. Interestingly, 30% of this loan is owed by DCG and several other entities.
More Creditors Seek Refund From Genesis
Apart from those represented by Proskauer Rose, another group of creditors are being represented by Kirkland & Ellis which is also the legal firm representing bankrupt Celsius Network and Voyager Digital. Although the amount owed to this group is yet to be disclosed.
Some few weeks back, Gemini announced it was actively working with Genesis and DCG to ensure creditors are able to redeem their Earn funds. At that time, it clearly stated that both companies were contributing positively to the effort.
“We continue to work with Genesis Global Capital, LLC (Genesis) — the lending partner of Earn — and its parent company Digital Currency Group, Inc. (DCG) to find a solution for Earn users to redeem their funds. This remains our highest priority and we understand Genesis and DCG remain committed to exploring every possible option to fulfill their obligations to Earn users,”
While many creditors are avoiding a bankruptcy process, that may be the eventuality for Genesis if it does not remain solvent or find capital to refund all its creditors.