Another of the key market players is facing serious problems. This time the foundations of Genesis have been shaken, whose representatives, on Thursday, January 19, filed for bankruptcy under Chapter 11.
Genesis begins restructuring process
Genesis’ problems have been known for a long time. In an article a few days ago, we reported that the U.S. Securities and Exchange Commission (SEC) had taken legal action against that lending platform, as well as the Gemini exchange. Both institutions were accused of illegally offering securities, which allegedly existed in the form of cryptocurrencies, in the Gemini Earn program.
However, representatives of the exchanges, in open letters, had already reported difficulties in raising capital belonging to their customers. Withdrawals of such funds were halted by Genesis last November. The reason was the turmoil resulting from the collapse of FTX.
According to the latest information, things have gone much further. The announcement that Genesis made on January 19 reads that the entity:
“was engaged in discussions with its advisors to its creditors and corporate parent Digital Currency Group (DCG) to assess the most effective path to preserve assets and move the company forward.”
All discussions were unsuccessful, resulting in, as we read further:
“Genesis has now embarked on a court-supervised restructuring process to further move these talks forward.”
What lies ahead for Genesis in the near future
The bankruptcy petition was filed in the Southern District of New York. According to the restructuring plan, company officials are considering a two-pronged process. This included a “sale, capital increase and/or capitalization transaction.” Such a solution offers the possibility of continuing the company’s operations, which could happen under a new owner.
The value of the company’s liabilities is not clearly defined and is in the range between $1 billion and $10 billion. Similar amounts are expected to apply to its currently held assets. In addition, Genesis is also expected to have $150 million in cash. These funds, meanwhile, are expected to “provide sufficient liquidity to support ongoing business operations and facilitate the restructuring process.”
Cameron Winklevoss pleased with steps taken by Genesis