Status: 01/20/2023 11:12 a.m
Crypto exchange Genesis has filed a partial application for bankruptcy protection. The trading division is not affected by the bankruptcy. Genesis had already temporarily stopped lending in November as a result of the FTX affair.
The lending arm of cryptocurrency broker and lender Genesis has filed for Chapter 11 bankruptcy. So the company is attempting to continue operations while preparing a recovery plan. As management emphasized, this was a “strategic move to achieve a global solution that maximizes value for all customers and stakeholders and strengthens the company for the future.”
The company reportedly failed to raise the necessary liquidity to meet existing lender requirements. Customers of the Gemini crypto exchange are particularly affected by this. The company estimated the number of creditors at 100,000, according to court documents.
Trading division not affected
Genesis said it intends to sell assets or otherwise raise money. The crypto company currently has $150 million in cash to fund its operations. However, Genesis emphasized that the trading division was not affected by the insolvency. Customers could buy and sell cybercurrencies like bitcoin as usual.
The parent company Digital Currency Group (DCG) had been negotiating with various groups of creditors for some time in view of the impending liquidity shortage. Genesis had previously warned investors that if the company couldn’t raise cash, it might have to file for bankruptcy. In January, the crypto firm laid off around 30 percent of its employees.
Consequence of the FTX bankruptcy?
Financial pressures at DCG began to emerge after hedge fund Three Arrows Capital went bankrupt. Genesis suspended lending in November shortly after crypto exchange FTX, where Genesis held some of its funds, filed for bankruptcy. “FTX has created unprecedented market turmoil, resulting in unusual withdrawal requests that exceeded our current liquidity,” Genesis tweeted this fall.