Genesis Is Considering Filing For Chapter 11 Bankruptcy Protection
- Genesis is considering filing for bankruptcy protection after struggling with the collapse of FTX.
- Before making this decision, the company also cut another 30% of its workforce.
- After a long time of “buying time,” the company could not settle Gemini’s 900 million debt.
DCG’s subsidiary, which suffered heavily after the collapse of FTX, is Genesis Global Trading, with a stranded amount of up to $175 million. Genesis is considering filing for bankruptcy after cutting another 30% of its staff yesterday.
Genesis hired investment bank Moelis & Company to review Chapter 11 bankruptcy filings, according to a report from the Wall Street Journal. A Genesis spokesperson told the Journal that the move is designed to “preserve customer assets and drive the business forward.”
Genesis was struck by the collapse of FTX and its sister hedge fund Alameda Research in the fall of 2022.
The magazine reported that Alameda received millions of dollars from Genesis before it collapsed. After Alameda went bankrupt, Genesis froze its client funds in November.
As mentioned in an earlier Coincu News article, thursday’s additional 30% staff cuts left Genesis with 145 employees. Before the previous layoffs in August, Genesis employed 260 people.
“As we continue to face unprecedented challenges in the industry, Genesis has made the difficult decision to reduce our headcount globally,”A New York-based company spokesperson said to Reuters.
Genesis is one of many crypto companies trying to manage the aftermath as various interconnected parts of the industry go up in flames. Before Genesis froze all withdrawals, the company begged for a $1 billion emergency loan from investors.
These are the latest developments from Genesis after this lending unit was rumored to be insolvent when it blocked withdrawals from mid-November 2022, just a few days after FTX went bankrupt.
Not only that, even Genesis’ parent company, Digital Currency Group (DCG), was also caught up in a spiral of crisis because of unclear internal transactions, which made this company insolvent.
After being accused of deliberately “buying time” to find an impossible way out, Genesis was sent an “ultimatum” by a $900 million creditor, Gemini, asking to come up with a solution by January 8.
In response, the CEO of Genesis, in a letter to investors on January 4, stated that the company “needs more time” to handle the crisis. To date, no action has been taken.
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