Breaking: Crypto Giant Genesis To File For Bankruptcy As Early As This Week

In light of the current shortage of liquid assets–Genesis Global–the crypto lending division of Digital Currency Group (DCG) has been engaged in private discussions with a variety of creditor parties. According to a recent report, it has issued a warning that the firm may need to file for bankruptcy if it is unable to raise further funding.

Genesis Prepares For Bankruptcy

Reports suggest that creditors like the Winklevoss twins would be willing to agree to a remission period between one and two years under the prepackaged bankruptcy plan. This forbearance period would apply to the majority of the payments. Furthermore, creditors would receive cash payments in addition to shares in the parent business of Genesis, the Digital Currency Group, which is headed by Barry Silbert.

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Cameron Winklevoss, the co-founder of Gemini, and Barry Silbert have been engaged in a Twitter fight where the former has accused Silbert of intermixing finances at the crypto conglomerate and of negotiating in bad faith. In his most recent open letter, he demanded the DCG chief stand down from his position as he failed to keep his end of the promise of returning customer funds worth $900 million.

Genesis Faces Growing Tension

Further proving Genesis’ weak financials, DCG sent a letter to the shareholders on January 17,  where the company informed that it will stop paying quarterly dividends in an attempt to preserve capital. The creditors, Genesis, and DCG have compared several different approaches but have not been able to come to an agreement as of yet. Both Kirkland & Ellis and Proskauer Rose have been serving as advisors to various creditors’ groups.

After the failure of the hedge fund Three Arrows Capital, financial pressure started to build up at Barry Silbert’s DCG. In November, shortly after the cryptocurrency exchange FTX–where Genesis had some of its cash stored–filed for bankruptcy, Genesis ceased processing withdrawals. The crypto exchange Gemini Trust, which is run by Cameron and Tyler Winklevoss, has been affected by these developments as Gemini Earn, a program that allows users of the platform to earn interest on their coins by lending them out through Genesis, also had to cease processing redemption requests.

Genesis Global is currently preparing the groundwork for the bankruptcy petition, which may take place as soon as this week.

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Pratik has been a crypto evangelist since 2016 & been through almost all that crypto has to offer. Be it the ICO boom, bear markets of 2018, Bitcoin halving to till now – he has seen it all.

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