Crypto lender Genesis has filed for bankruptcy in the U.S., after the FTX contagion took a huge toll on the company.
Genesis, Chapter 11. Cryptocurrency lender Genesis Global Capital filed for bankruptcy Thursday, joining a growing list of digital asset companies decimated by the drop in token prices and fallout from FTX’s collapse. The lending arm of billionaire Barry Silbert’s Digital Currency Group said in bankruptcy filings that it owes at least $3.4 billion to more than 100,000 creditors. The move comes two months after Genesis suspended withdrawals, largely due to major losses from the demise of crypto hedge fund Three Arrows Capital and FTX-affiliated trading firm Alameda Research. (Fortune newsletter)
The company yesterday filed for chapter 11 bankruptcy protection with a court filing, estimating lenders assets and liabilities to both be in the range of $1bn- $10bn, while also listing over 100,000 creditors.
Genesis also listed a $765.9 million loan payable from Gemini, as well as other sizeable claims that include a $78 million loan payable from Donut, a high-yield, decentralized platform, and a VanEck fund, with a $53.1 million loan payable.
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The company’s parent group Genesis Global Holdco and lending unit Genesis Asia Pacific also filed for bankruptcy protection.
Recall that on November 21, after the FTX collapse, Genesis disclosed that it had no plans to file for bankruptcy imminently, but has since appointed an external party to advise on its financial predicament.
Meanwhile, the company struggled to stay afloat which saw the DCG intervene, by providing a cash injection of $140 million. But despite multiple DCG bailouts, Genesis failed to escape the FTX fallout as it finally succumbed to bankruptcy filing.
Following its recent bankruptcy filing, Genesis CEO Derar Islim said in a statement, “We look forward to advancing our dialogue with DCG and our creditors’ advisors as we seek to implement a path to maximize value and provide the best opportunity for our business to emerge well-positioned for the future.”
Also, the company via a statement disclosed that it has taken strategic actions to achieve a global resolution to maximize value for all its clients and stakeholders as it seeks to strengthen its business for the future.
Recall that during the collapse of FTX last year, Genesis halted withdrawals on its platform in November and had been negotiating with creditors while trying to secure fresh capital since.
The company revealed that it had a $2.5 billion exposure to Alameda, though that position was closed out in August. After FTX’s bankruptcy in November, Genesis said that about $175 million worth of its assets were locked on FTX’s platform.
Genesis, which is backed with investments by Softbank and Alphabet, had also been exploring the sale of assets to pay back more than $3bn owed to creditors, which saw the company also laid off about 30 percent of its workforce.
Genesis is the latest crypto exchange platform to be impacted by the FTX collapse. The company joins the likes of other crypto exchanges such as BlockFi, FTX, Voyager, and Celsius that have filed for Bankruptcy.
Since the FTX filed for chapter 11 bankruptcy in November, it has sent shocking waves to the crypto industry as there has been a growing list of other companies filing for bankruptcy due to their exposure to the company.
The FTX’s collapse also shook the volatile crypto market, which lost billions at the time, falling below a $1 trillion valuation.