The lending businesses of Genesis have filed for bankruptcy.
Gadget Africa reports that Genesis Holdco and two subsidiaries of the distressed lender Genesis Global Capital and an Asia-Pacific arm—filed for Chapter 11 bankruptcy protection in the Southern District of New York. According to bankruptcy filings, Genesis Holdco owes its top 50 creditors some $3.5 billion.
“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,” Derar Islim, the interim CEO of Genesis, said in a statement made available to the public.
Gemini, a crypto platform founded by Tyler and Cameron Winklevoss of Facebook fame is the biggest loser in the Genesis debacle. Genesis is the lending partner for Gemini’s “Earn” program, which gave hundreds of thousands of mostly retail investors the to lend their crypto in return for high-interest rates.
Genesis has proposed to exit through Chapter 11 with the creation of a trust that will distribute assets to creditors and provide a better outcome for Gemini Earn users. The proposed plan includes a possible sale, capital raising, or equitization transaction that would help Genesis emerge under new ownership.