Crypto lender Genesis CEO Barry Silibert filed for Chapter 11 bankruptcy last Thursday in Manhattan Federal Court. This is yet another crypto-collapse after the FTX, Sam Bankman-Fried scandal in November.
The price of bitcoin has dropped a shocking 65% since the beginning of 2022, according to Reuters. Starting with the downfall of FTX, BlockFi, Three Arrows Capital, Voyager Digital, Celsius Network and now Genesis.
The company documented over 100,000 creditors and has liabilities ranging from $1.2 billion to $11 billion dollars, according to bankruptcy documents.
Over the past few months, there was a presumption Genesis would enter bankruptcy protection. The Securities and Exchange Commission filed a lawsuit against Genesis and its one-time partner, Gemini, owned by former Olympic rowers Cameron and Tyler Winklevoss, for illegally selling crypto assets to investors. Totalling to at least $900 million, investors would earn as much as 7.4% interest on their crypto investment.
Genesis halted the withdrawals of nearly 340,000 Gemini users due to the rapid and unsteady changes.
The bankruptcy filings showed Genesis listing a $765.9 million loan expected from Gemini. There were two other sizable loans made out to Donut, a decentralized platform and a VanEck fund worth $78 million and $53.1 million, respectively.
Gemini co-found Cameron Winklevoss expressed his stance on the matter on Twitter writing that Silibert and the Digital Currency Group “continue to refuse to offer creditors a fair deal.”
“We have been preparing to take direct legal action against Barry, DCG, and others,” he wrote.
Genesis is being represented by Kirkland & Ellis and Proskauer Rose law firms, according to CNBC.
The downfall of FTX along with its CEO placed an immediate halt on the market in the crypto world and customers attempted to make withdrawals, often with little success. According to the Wall Street Journal, Genesis sought a $1 billion emergency bailout— but was denied.
CoinDesk reported that parent company DCG owes creditors at least $3 billion suspended dividends.
In the beginning of January, Genesis announced they would be laying off nearly 30% of its staff, which removes just about 145 employees.
“We look forward to advancing our dialogue with DCG and our creditors’ advisers as we seek to implement a path to maximize value and provide the best opportunity for our business to emerge well-positioned for the future,” Genesis interim chief executive Derar Islim said in a statement.
Though no criminal charges have been filed, the fate and reputation of Silibert and other administrators is in question.
This is a developing story.
