After suspending redemptions for its customers last November and battling Gemini cofounders Cameron and Tyler Winklevoss since then, Barry Silbert’s Genesis Global Capital filed for bankruptcy on Thursday.
Genesis, itself a subsidiary of billionaire Barry Silbert’s Digital Currency Group that connects institutional investors to digital asset markets, said in the filing that it owes creditors at least $3.4 billion, according to Reuters.
The company had assets and liabilities worth between $1 billion and $10 billion and more than 100,000 creditors.
The company’s spot trading and derivatives subsidiary as well as Genesis Global Trading, the company’s digital asset brokerage, did not file for bankruptcy and continues operating, according to the Wall Street Journal.
DCG did not immediately respond to a request for comment. Genesis did not immediately respond to Coins2Day’s request for comment.
The bankruptcy was in part spurned in part by the precipitous decline in cryptocurrency prices last year, as well as by the hundreds of millions of dollars in loans Genesis gave to FTX-affiliated Alameda Research, which declared bankruptcy along with FTX last November. Its subsidiary Genesis Asia Pacific Pte. Ltd., which also filed for bankruptcy Thursday, loaned bankrupt crypto hedge fund Three Arrows Capital $2.36 billion.
The company said it had $150 million in cash available to fund the restructuring process.
“While we have made significant progress refining our business plans to remedy liquidity issues caused by the recent extraordinary challenges in our industry, including the default of Three Arrows Capital and the bankruptcy of FTX, an in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all Genesis stakeholders,” Genesis interim CEO Derar Islim, said in a Thursday statement.
Adding to the complicated situation is a recent charge by the Securities and Exchange Commission that Genesis, along with crypto exchange Gemini, sold unregistered securities to retail customers.
Genesis and Gemini Global Trading had cooperated for Gemini’s yield-bearing product Gemini Earn since 2021, but the relationship soured last November when Genesis suspended redemptions. The move left Gemini Earn customers without access to their funds, some of whom sued the Winklevoss twins for alleged fraud.
On Jan. 2, Cameron Winklevoss published a letter demanding Silbert and Genesis repay Gemini $900 million it said belonged to about 340,000 customers of its Earn product. In a follow-up letter Winklevoss called for Silbert to be ousted as the CEO of Genesis’ parent company Digital Currency Group.
DCG has halted its quarterly dividend payments to conserve cash, and one of its subsidiaries, the crypto news outlet CoinDesk told Bloomberg Wednesday it was considering a partial or full sale.
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