Alex Dovbnya
Genesis Global has now filed for Chapter 11 bankruptcy protection after a series of turbulent events caused severe liquidity problems for the troubled crypto brokerage firm
Genesis Global Holdco LLC and its two lending subsidiaries, Genesis Global Capital LLC and Genesis Asia Pacific Pte. Ltd., filed for Chapter 11 bankruptcy in New York’s federal district court, marking the collapse of another major crypto brokerage firm.
The price of Bitcoin, the world’s largest cryptocurrency, fell about 0.5% on the news.
“The first should be last,” said former BitMEX CEO Arthur Hayes on the bankruptcy filing.
Genesis’ filing comes after months of turbulent market conditions that severely impacted the crypto industry as a whole, resulting in massive losses for many lending firms.
Earlier this week, Bloomberg reported that the crypto brokerage company, which is a subsidiary of Digital Currency Group, was on the brink of bankruptcy as it was short on cash. According to the report, the company negotiated with various groups of creditors before filing for bankruptcy.
As part of the bankruptcy proceedings, the company presented a coherent roadmap for a potential exit, which would include a restructuring plan designed to provide adequate funding while meeting its obligations to customers. This was supported by an independent board, with Derar Islam appointed interim CEO in August 2022.
Genesis has also secured $150 million in cash to provide liquidity as they restructure their operations and advance creditor payments.
There seemed an air of optimism in statements on the subject from relevant parties such as Islam and independent director Paul Aronzon, although much hard work remains to be done.
Aronzon claims that it is possible to achieve “the best solution” for customers and other stakeholders.
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