According to reports, Genesis has begun preparing for a possible bankruptcy filing by the end of this week.
According to a report by Bloomberg, the troubled cryptocurrency lending platform Genesis Global has begun the process of declaring bankruptcy. The platform may declare bankruptcy as early as this week. Since November 2022, the platform has been on the verge of bankruptcy, attempting to raise roughly a billion dollars.
Notably, the report was published days after Digital Currency Group (DCG), Genesis’s parent company, discontinued quarterly payouts. This was done to maintain liquidity and cut operational expenses. Since the beginning of the year, the crypto lending platform has been in a dispute with Gemini, a big American crypto exchange. The source of the conflict is the November decision to suspend Genesis withdrawals in response to the FTX collapse.
Since then, users of Gemini’s Earn cannot access their cash. Nearly 340,000 individuals participated in the Earn program of the cryptocurrency exchange. Approximately $900 million is presently locked up inside Genesis. And as a consequence of these fruitless discussions, Cameron Winklevoss, the CEO of Gemini, has demanded Barry Silbert’s departure from his role as CEO.
In addition, the U.S. Securities and Exchange Commission stepped in to resolve the dispute. Both platforms were fined by the regulatory agency for selling unregistered securities. Despite Gemini’s attempts to collaborate with the regulatory agency on its Earn program, this action was taken.
According to a recent story by The Block, Genesis’ creditors, including Gemini, are “negotiating a prepackaged bankruptcy plan.” Gemini and other creditors would get cash and ownership in DCG in exchange for a two-year forbearance term.
Notably, the crypto lender owes nearly $3 billion to creditors, including Gemini consumers. As a means of paying them, its parent business considered selling some of its assets in order to obtain funds. The platform was considering the sale of around $500 million worth of its interests. DCG has invested in about 200 cryptocurrency ventures, including banks, exchanges, and custodians.
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