Crypto lender Genesis files for bankruptcy
By Abigail Townsend
Date: Friday 20 Jan 2023
(Sharecast News) - Crypto broker Genesis has filed for bankruptcy protection, the latest firm to falter in the aftermath of FTX's collapse.
The US firm confirmed on Thursday evening that along with two of its lending subsidiaries - Genesis Global Capital and Genesis Asia Pacific - it had filed for Chapter 11 bankruptcy protection in New York.
Other subsidiaries, which are involved in derivatives and spot trading, and Genesis Global Trading are not included in the petition and continue to trade.
Genesis, part of the crypto conglomerate Digital Currency Group, said it would now seek a sale, capital raise and/or equitization transaction, which would enable the business "to emerge under new ownership"". It has more than $150m in cash to fund both the ongoing businesses as well as the restructuring process, it noted.
According to the Financial Times, Genesis owes creditors more than $3bn.
Derar Islim, interim chief executive, said: "While we have made significant progress refining our business plans to remedy liquidity issues caused by the recent challenges in our industry, including the default of Three Arrows Capital and the bankruptcy of FTX, an in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all stakeholders."
In a separate note to customers, Islim - who was appointed last August - said lending and new loan originations remained suspended, with all client claims due to be addressed through the Chapter 11 process.
He concluded: "We are grateful for your continued patience and support, and we look forward to reaching an equitable solution."
Three Arrows Capital, a Singapore-based crypto hedge fund, went bankrupt in June last year, owing Genesis $1.2bn. Shortly after, Genesis announced it would cut a fifth of its staff and that long-standing chief executive Michael Moro was stepping down.
FTX imploded in November, sending shockwaves through the industry as the crypto exchange filed for bankruptcy and high-profile owner Sam Bankman-Fried was arrested over allegations of fraud.
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