DCG’s Genesis Declares Bankruptcy

The cryptocurrency lending platform Genesis Global Capital, which is controlled by DCG, has submitted a Chapter 11 bankruptcy petition. Genesis Global Holdco and its subsidiaries, Genesis Asia Pacific and Genesis Global Capital, are the ones who need to send in applications.

What Exactly is Going On?

According to the paper, there are more than 100,000 creditors who have assets and liabilities that range anywhere from one billion to ten billion dollars. The numbers range anywhere from $100 million to $500 million for the subsidiaries. The top management team is operating under the assumption that unsecured creditors will be able to obtain funding during the restructuring process.

Other Genesis companies, including those involved in derivatives, spot trading, and custody, as well as Genesis Global Trading, are not included in the application and will continue to trade with customers. Genesis Global Capital has not yet recovered from the fallout of the bankruptcy of FTX in November 2022 and the default of hedge fund Three Arrows Capital in June 2022. If, in the first scenario, the parent DCG was able to give support in the amount of $1.1 billion, then in the second scenario, efforts to seek external financing were fruitless.

A little look back in time

The platform terminated the employment of thirty percent of its workforce at the beginning of the year 2023. When asked about the possibility of the platform’s top management going bankrupt in November, Moelis & Company, the investment bank that was engaged for the job, provided several different plausible scenarios.

At the end of the year 2022, creditors attempted to steer clear of a disorderly and expensive bankruptcy process. On the eve of the event, it became clear that the corporation is still planning to proceed with this step. There have been rumors in the media that Genesis’ debt has reached $3 billion. The 900 million dollars in claims filed by Gemini customers are included in this total.

According to the paperwork, Genesis owes the Winklevoss brothers’ exchange a total of 765 million dollars. Mirana (BitDAO and Bybit), Moonalpha (Babel Finance), Coincident Cap, Decentraland, VanEck, Abra, Cumberland, and the Stellar Foundation are a few of the other leading lenders.

Public statements

Cameron Winklevoss, a co-founder of Gemini, stated that declaring bankruptcy is an essential step in the process of recouping lost assets.

Winklevoss cited DCG and its founder Barry Silbert’s refusal to offer a “fair bargain” as the reason for his decision. If they would not comply, he threatened to bring a lawsuit against the holding company and the CEO of the company. The top management made the observation that submitting a petition for protection under Chapter 11 would make it possible to “find fraud” for which the Digital Currency Group and Silbert are “responsible.”

Cameron Winklevoss, who helped start Gemini, said that filing for bankruptcy is an important step in getting back lost assets. Winklevoss’s decision was based on the fact that DCG and its founder Barry Silbert wouldn’t make a “fair deal.”e funding, the sale of non-strategic businesses, the retention of Grayscale, a digital asset manager, or the liquidation of GBTC.