Late Thursday, crypto broker Genesis announced that it had filed for Chapter 11 bankruptcy protection. Derar Islim, the Interim CEO, issued a prepared statement.
He said that a restructuring via the court was the most effective solution for preserving the company’s assets and ensuring that Genesis stakeholders can see the best possible outcome.
A subsidiary of the Digital Currency Group (DCG), Genesis said that it had cash on hand worth $150 million, which would give it plenty of liquidity for funding operations during the restructuring program.
The bankruptcy filing was made in the Southern District of New York and the entities that filed the petition included a holding company by the name of Genesis Global.
There were also subsidiaries focused on crypto lending, Genesis Asia Pacific and Genesis Global Capital. It was clarified by a spokesperson that these were the only subsidiaries filing for Chapter 11 bankruptcy.
Genesis Global Trading, the custody business, and other subsidiaries involved in spot and derivatives trading were not included, as they were continuing their operations.
The filings follow multiple reports of the impending bankruptcy of Genesis and only a week after the company and the Gemini crypto exchange were charged by the SEC for violation of the securities law.
The start of the year had also seen Genesis lay off 30% of its workforce.
In 2013, Genesis had been the first company to introduce an OTC Bitcoin trading desk and had become one of the largest players in the industry.
However, more recently the headlines linked to the company had been about its rather public spat with crypto exchange Gemini.
The two companies had partnered on the Gemini Earn program and the crypto exchange said that Genesis has not released customer funds worth $900 million.
The Gemini Earn program had been ended on January 11th. The president and co-founder of the Gemini crypto exchange, Cameron Winklevoss also responded to the bankruptcy announcement.
He said that they would use every resource available to recover maximum funds in bankruptcy court on behalf of their Earn clients.
Winklevoss said that unless DCG and Silbert decide to resolve the issue and make a fair offer, they would file a lawsuit against the two soon.
He said that just because Genesis was going into bankruptcy does not mean that DCG or its CEO Barry Silbert is no longer accountable.
The official announcement has confirmed that the two biggest collapses that took place last year in the crypto industry had a severe impact on Genesis.
Islim stated that they had made significant progress in restructuring their business to resolve liquidity problems that occurred due to the collapse of the FTX exchange and Three Arrows Capital before that.
He added that they were now looking for a way to maximize value and for providing their business with the best opportunity to position themselves properly for the future.
A list of the top creditors of the company is also included in the bankruptcy filing.