DCG Subsidiary Genesis Global Is Likely to File for Chapter 11 Bankruptcy This Week
On Wednesday, January 18, citing sources familiar with the matter, Bloomberg reported that the Digital Currency Group (DCG) is on the verge of filing for Chapter 11 bankruptcy this week.
Sources familiar with the matter said that the negotiations between the troubled crypto lender and the creditors haven’t come to fruition thereby failing to move forward with any kind of resolution.
Crypto lender Genesis has been the victim of the contagion spread by the collapse of the crypto exchange FTX last year in November 2022. At the time of FTX’s demise, Genesis Global had over $175 million worth of their funds stuck with the exchange. Besides, Genesis was already facing challenges with the collapse of three Arrows Capital (3AC) in mid-2022.
Soon as Genesis suspended its withdrawals last month, the platform had already warned of its potential bankruptcy plans. Genesis and its creditors have been negotiating a Chapter 11 bankruptcy plan recently. As part of the deal, creditors like Winklevoss would agree to a forbearance period of anywhere between one to two years on payments. Furthermore, they would receive cash and equity from DCG as part of the agreement.
Soon after Genesis Global halted withdrawals last month, crypto exchange Gemini formed an ad hoc committee in order to coordinate efforts with other creditors and propose a resolution. Gemini is one of those crypto exchanges facing major troubles as Genesis is holding over $900 million worth of Gemini’s assets as the two were partners for Gemini's “Earn” program.
Last week, the U.S. Securities and Exchange Commission (SEC) charged both Gemini and Genesis for the sale of crypto assets as unregistered securities. Gemini co-founder Cameron Winklevoss has published an open letter to DCG and Genesis asking them to resolve the matter of their funds withheld.
Besides, Cameron has also requested DCG CEO Barry Silbert to step down from his position and accessed him of comingling funds at the crypto conglomerate while negotiating in bad faith.
Apart from genesis, another subsidiary of the Digital currency Group (DCG) - crypto media house CoinDesk - is exploring a potential sale and has hired advisors at the Lazard group for the same.
In an email statement, CoinDesk CEO Kevin Worth said: “Over the last few months, we have received numerous inbound indications of interest in CoinDesk”. Lazard will help CoinDesk “explore various options to attract growth capital to the CoinDesk business, which may include a partial or full sale.”