Joining the ranks of fallen crypto firms BlockFi and FTX, Genesis on Friday morning announced that it has filed for Chapter 11 bankruptcy.
The company, owned by Barry Silbert's venture capital firm Digital Currency Group (DCG), froze customer redemptions late last year after the collapse of FTX.
In the company's words, the restructuring will "achieve a global resolution to maximize value for all clients and stakeholders and strengthen its business for the future."
“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,” said Genesis Interim CEO Derar Islim in a press release.
The bankruptcy will not affect Genesis's derivatives, spot trading, broker dealer and custody businesses but rather its crypto lending firm, which just last year was offering exorbitant interest rates to customers who deposited their crypto in its Gemini Earn accounts.
In the filing, Genesis calls for a framework that resolves all claims to creditors. This could entail a sale to a new owner as well as a capital raise to pay creditors "fairly and equitably." If all that fails, the company said creditors will receive ownership interests in a reorganized Genesis.
“We have crafted a deliberate process and roadmap through which we believe we can reach the best solution for clients and other stakeholders,” said Paul Aronzon, an independent director at Genesis, in the release.
Genesis said it has $150 million in cash on hand to support its business operations through the restructuring process.