Genesis, along with its 2 subsidiaries, filed for Chapter 11 bankruptcy protection last Thursday following the collapse of FTX and Three Arrows Capital. The application has been filed by Genesis Global Holdco, Genesis Asia Pacific Pte, and Genesis Global Capital, seeking a joint administration of the case.
Genesis Global Capital has estimated over 100,000 creditors with liabilities between $1 billion and $10 billion. Its subsidiaries have reported assets worth around $100 million and liabilities worth $500 million. Genesis owes its top 50 creditors a collective amount of $3.5 billion.
Creditors include MoonAlpha Finance, Gemini, Mirana, Cumberland, and VanEck’s New Finance Income Fund. The names of creditors were shared in the bankruptcy filing last night.
Other subsidiaries and Genesis Global Trading, meanwhile, continue to operate client trading with no absolute change whatsoever. Genesis Global Capital is expecting to undergo a restructuring process and repay unsecured creditors with what is left in the accounts. Unsecured creditors, according to Genesis, have a higher chance of getting wiped out during bankruptcy.
Fresh capital could soon be raised by Genesis since the venture is under pressure to either raise the capital or settle a deal with the creditors. Statistically speaking, Genesis has to report a good balance of $900 million so as to continue not reaching a settlement with its creditors. While the word in itself sounds scary, Cameron Winklevoss highlights that it is a good step in the direction of recovering the assets of its clients.
Not just bankruptcy protection filing, but Genesis is also dealing with the layoff of its staff. Genesis is said to have laid off 30% of its staff to bring down the total number of employees to 145.
Circling back to Genesis, there is now a growing concern that the bankruptcy petition could lead to the fall of the Grayscale Bitcoin Trust, with liquidation the only option for its holding of over 600,000 Bitcoin.
Cameron Winklevoss has published a series of Tweets, in this case informing the community that the team has indeed been working to negotiate an acceptable solution while DCG and Barry Silbert refuse to offer a fair deal to the creditors. Cameron has highlighted that bankruptcy filing will not only help recover assets but will also put Genesis under judicial oversight, requiring discovery into what brought Genesis to this point.
Having said that, Winklevoss clarified that Barry and DCG would not be spared of any wrongdoing they have done to over 340,000 Earn program users. Gemini has been preparing to take legal action against both. It could very much go through if Silbert and DCG refuse to make a fair deal with the creditors.
This marks an important milestone in efforts to help Earn users, added Cameron, who has then concluded, stating that helping the users will remain their priority.