- Bloomberg has alleged that Genesis is preparing to file for bankruptcy
- The company, part of the Digital Currency Group, has suffered massively with the crypto contagion from 2022
- The news would impact Gemini Earn customers, who have $900 million trapped on the platform
Troubled lending platform Genesis is preparing to file for bankruptcy as soon as this week, according to Bloomberg. The outlet reported yesterday that Genesis, which owes $900 million to Gemini Earn customers, has been in discussions with various creditor groups as it continues to battle a liquidity crisis brought on by the crypto contagion of 2022. Genesis has previously warned that a bankruptcy filing may be necessary if it cannot raise sufficient funds, although the situation is still fluid and will change if it can find a backer.
Genesis Seeking $500 Million
Genesis was hit hard by most of the major crypto collapses of 2022, most notably Three Arrows Capital and FTX, leaving it seeking a $500 million cash injection. Genesis Global Capital, the company’s lending arm, froze withdrawals after the collapse of FTX, which has led to a war of words between Barry Silbert, the CEO of Genesis owner Digital Currency Group (DCG), and Cameron Winklevoss, co-owner of Gemini.
Winklevoss will know that if Genesis does enter bankruptcy then Gemini will have little chance of getting all of its customers’ money back, which could see it hit with a lawsuit itself.
Genesis Creating Restructuring Plan
Despite ongoing negotiations and proposals being exchanged between creditors, Genesis, and DCG, no agreement has been reached yet, with Kirkland & Ellis and Proskauer Rose acting as legal advisers to the groups of creditors. Bloomberg says that Genesis is in the process of developing a restructuring plan and has been exchanging proposals with its creditors. Some of the creditors have suggested receiving a combination of cash and equity from DCG, according to Bloomberg sources.
Earlier this week, DCG halted dividends to shareholders in order to preserve cash, cash that may very well soon be needed to help Genesis in every way possible.