Genesis, a digital currency brokerage, declared late Thursday that it had filed for Chapter 11 bankruptcy.
“An in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all Genesis stakeholders,” said Genesis’ interim CEO Derar Islim.
The company, a division of Digital Currency Group (DCG), claims to have “ample liquidity”—more than $150 million in cash on hand—to support business operations during the reorganization process.
The holding firm Genesis Global and its lending-focused subsidiaries Genesis Global Capital and Genesis Asia Pacific are the organizations that submitted the Chapter 11 filings in the Southern District of New York.
Genesis Global Trading and other subsidiaries engaged in the derivatives, spot trading, and custody sectors are not covered. According to a representative for Genesis, they are still operating.
The documents were filed a week after the SEC accused Genesis and cryptocurrency exchange Gemini of breaking securities laws and following widespread allegations of Genesis’ impending bankruptcy. 30% of the workforce of Genesis was let go at the start of the year.
In 2013, Genesis opened the first over-the-counter Bitcoin trading desk. Since then, it has grown to be a major participant in the market. However, news about the company has recently focused on its open conflict with the cryptocurrency exchange Gemini.
Genesis and Gemini collaborated on the Gemini Earn program, and according to Gemini, more than 900 million dollars in consumer cash are being withheld. On January 11, Gemini Earn was officially discontinued.
Cameron Winklevoss, co-founder and CEO of Gemini, responded to the revelation on Twitter by stating that “we will utilize every option available to us in the bankruptcy court to maximize recovery for Earn users and any other parties within the bankruptcy court’s authority.”
“Unless Barry and DCG come to their senses and make a fair offer to creditors, we will be filing a lawsuit against Barry and DCG imminently,” Winklevoss posted. “Crucially, the decision to put Genesis into bankruptcy does not insulate [DCG CEO] Barry [Silbert], DCG, and any other wrongdoers from accountability.”
The official statement reaffirms that Genesis suffered losses as a result of two of the worst crashes in the cryptocurrency market last year.
“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,” Islim said. “We seek to implement a path to maximize value and provide the best opportunity for our business to emerge well-positioned for the future.”
The main creditors of the firms are included in the papers. They include Mirana Corp. of Singapore, Moonalpha Financial Services of Hong Kong, Coincident Capital of the Cayman Islands, Donut, Inc., Altcoinomy of Switzerland, Streami Inc. of Korea, and Heliva International of Panama, many of whom are unnamed and each of whom has a reported unsecured claim of $50 million to $150 million.
According to Gemini’s filing, it has hired four New York law firms to help it with the restructuring: Cleary Gottlieb Steen & Hamilton, Alvarez & Marsal Holdings, Moelis & Company, and Kroll Restructuring Administration.
“We have crafted a deliberate process and roadmap through which we believe we can reach the best solution for clients and other stakeholders,” Paul Aronzon, an independent director at Genesis, said.