• Genesis Global has filed for Chapter 11 Bankruptcy, owing over $3.5 billion to creditors.
• Gemini is the largest creditor of Genesis, being owed over $800 million from its Gemini Earn customers.
• The bankruptcy proceedings of Genesis may cause contagion to Grayscale Investments and its huge BTC reserve.
Genesis Global, the subsidiary of the Digital Currency Group (DCG), has finally filed for Chapter 11 Bankruptcy, owing its creditors more than $3.5 billion. This news comes after a series of financial woes the company had been dealing with for the past few months. The company named over 100,000 creditors in its bankruptcy filing published on Thursday.
The troubles of Genesis began last year when the crypto hedge fund, Three Arrows Capital (3AC) went bankrupt. This caused Genesis to halt withdrawals with the collapse of the FTX Derivatives Exchange. The bankruptcy of 3AC and the FTX implosion finally exposed the financial woes that had been lurking for several months.
Per the bankruptcy filing, Genesis is owing some very prominent investors huge sums of money. Gemini, the crypto trading platform, is the largest creditor of Genesis, being owed more than $800 million from its Gemini Earn customers. Other companies to whom the bankruptcy proceedings will give priority include Grayscale Investments and its huge BTC reserve.
The first primary consideration for Genesis is a restructuring that can either result in a selloff or reorganization. The firm said it is exploring the best option to satisfy all of its creditors. The company hopes that by the end of the bankruptcy proceedings, it will have enough funds to repay all users with unstructured credits.
The filing of bankruptcy by Genesis Global is a cause of worry for the entire crypto market as it may fuel contagion to Grayscale Investments and its huge BTC reserve. The financial woes of the company are a reminder of the volatility of the crypto market, and the need for investors to be aware of the risks before investing in any asset. It remains to be seen if the bankruptcy proceedings of Genesis will be able to satisfy all its creditors and put the company back on the right path.