Genesis, which halted customer withdrawals two months ago, has become the latest crypto industry participant to declare bankruptcy.
Bloomberg reported on Thursday that the business held secret talks with various creditor groups. The loan division has been languishing since the collapse of FTX, where it had $175 million in locked funds, and had told potential investors that it would go bankrupt if it couldn't secure new cash.
Genesis was “at all costs” attempting to avoid insolvency, which they defined as “admirable but pricey.”
Genesis' parent business, Digital Currency Group, was recently accused by Gemini of making false promises concerning Genesis' solvency. Cameron Winklevoss, co-founder of Gemini, has asked DCG's board to remove CEO Barry Silbert, claiming he deceived Gemini and prevented its consumers from accessing $900 million held in a Genesis-related product.
However, Silbert refuted this assertion, claiming that DCG owed Genesis $447.5 million in addition to $78 million of bitcoin maturing in May of this year. Genesis is also owing another $1.1 billion promissory note, which matures in 2032, he claimed.
He further stated that DCG has not borrowed funds from Genesis since May 2022 and is current on all existing debts.
Nonetheless, DCG reportedly warned shareholders this week that dividends will be suspended in order to cut operating expenses and retain liquidity.
According to the Financial Times, DCG is one of the most active investors in the crypto market, with over $200 million invested in 35 nations totaling approximately $500 million.
It principally operates five businesses: CoinDesk, Genesis, Grayscale, Foundry, and Luno, a digital asset exchange. According to reports, CoinDesk is considering a partial or full sale.
By press time, neither Genesis nor DCG had responded to Blockworks' request for comment.
Genesis and Gemini were recently charged by the Securities and Exchange Commission for allegedly marketing unregistered securities to retail investors through the Earn program.
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