Crypto Lender Genesis Files for Bankruptcy, Dealing Blow to Digital Currency Group
Genesis filed amid mounting problems for the company and its clients, including Gemini.
After months of speculation it would make the move, Crypto lending giant Genesis has filed for Chapter 11 bankruptcy protection in a Manhattan federal court, listing over 100,000 creditors and liabilities ranging from $1.2 billion to $11 billion. The filing comes just days after the Securities and Exchange Commission (SEC) sued Genesis and the Winklevoss twins' Gemini cryptocurrency exchange over an unregistered securities offering.
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As CNBC reports, the collapse of FTX has caused a ripple effect throughout the crypto industry, leading customers across exchanges to seek withdrawals. Digital Currency Group (DCG), the parent company of Genesis, owes creditors more than $3 billion and has suspended dividends this week, according to CoinDesk. The company was also forced to take on liability from 3AC's $1 billion collapse.
The bankruptcy filing and the SEC lawsuit are just the latest grim developments in the crypto industry, which has experienced several high-profile collapses in the last few months, leading to increased scrutiny of crypto lending and other digital currency-related businesses and calls for greater industry regulation and oversight.
2/ While we have been working around the clock to negotiate an acceptable solution, @BarrySilbert and @DCGco — the parent company of Genesis – continue to refuse to offer creditors a fair deal.
— Cameron Winklevoss (@cameron) January 20, 2023
Cameron Winklevoss, who founded Gemini with his twin brother Tyler, said on Twitter that Barry Silbert, the CEO of Digital Currency Group, is refusing "to offer creditors a fair deal," prompting legal action to bring more transparency to the situation.
This is just one example of the escalating tensions between leading names in crypto as the industry continues to evolve and expand. It remains to be seen how the bankruptcy proceedings will play out and what the future holds for Genesis, exchanges like Gemini, and other crypto-lending companies.
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