Genesis Global files for bankruptcy

The parent firm of embattled crypto lender Genesis Global Capital, Genesis Global Holdco, LLC, filed for Chapter 11 bankruptcy protection in New York federal district court.

FTX collapse, the breaking point for Genesis

Genesis Global Holdco, LLC estimated in a voluntary petition that it has between 1 and 49 creditors, between $100 million and $500 million in assets, and between $100 million and $500 million in liabilities.

According to the filing, subsidiaries Genesis Global Capital, LLC and Genesis Asia Pacific Pte. Ltd have also requested bankruptcy protection.

When hedge firm Three Arrows Capital and crypto exchange FTX went bankrupt in 2022, it severely disrupted Genesis’ lending operations.

According to a press release, Genesis Global Trading and its other subsidiaries, active in the spot trading, derivatives, and custody sectors, are not included in the filing and continue to conduct client trading activities.

Genesis has been frantically trying to find new financing or work out a solution with creditors since the fall and bankruptcy of the crypto firm FTX in November.

Due to the collapse of FTX, the business’s institutional lending division was obliged to halt redemptions and new originations. Along with parent company Digital Currency Group (DCG), the division was also under increasing pressure to repay $900 million in locked deposits.

Genesis hired investment bank Moelis & Company late last year to help with the options research. It also confirmed earlier this month that it would be restructuring by 30%, cutting 145 people.

Considering Genesis and digital asset manager Grayscale have the same parent company in DCG, the bankruptcy filing may have huge effects on bitcoin and the crypto industry.

The Grayscale Bitcoin Trust (GBTC), run by Grayscale, is a fund with over $10 billion under management that was trading at a record discount to net asset value as of late last year; however, that gap has since closed.

Market apprehensions include the possibility that GBTC might liquidate assets of more than 600,000 bitcoin assets due to the Genesis bankruptcy.

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