<p>Troubled crypto lender Genesis Global Trading, which has halted withdrawals, is in the final stages of preparation to file for Chapter 11 <a href=”https://www.financemagnates.com/terms/b/bankruptcy/” class=”terms__main-term” id=”41b3ef0d-d805-441d-8443-121890264e94″ target=”_blank”>bankruptcy</a>, according to multiple media reports. Anonymous insiders have revealed that the company might confirm the bankruptcy filings within the week if it <a href=”https://www.financemagnates.com/cryptocurrency/crypto-lender-genesis-seeks-1b-emergency-loan/” target=”_blank” rel=”follow”>fails to raise any cash</a>.</p><p>Genesis Prepares to File for Bankruptcy</p><p>Genesis, a subsidiary of Digital Currency Group (DCG), is reportedly negotiating with creditors’ confidentiality. However, the parties failed to reach any settlement despite multiple proposals.</p><p>The troubles at Genesis started with the collapse of the crypto-centric hedge fund Three Arrows Capital last year, to which the crypto lending firm loaned $2.4 billion; all of which went bust. The lending company received the final blow with the collapse of FTX last November.</p><p>Check out the iFX EXPO International 2022 session on “How Changes in the Culture of Digital Assets are Affecting the Industry.”</p><p>Is Genesis Going to Be the Latest Crypto Firm to Collapse? </p><p>Genesis halted all withdrawals due to a liquidity crunch in November that directly impacted the users of Winklevoss’ Gemini Earn. Genesis and Gemini had an agreement under which Gemini marketed <a href=”https://www.financemagnates.com/terms/c/crypto-lending/” class=”terms__secondary-term” id=”f93b5d7e-2219-4a1d-a7a8-bbcf45e69e8c” target=”_blank”>crypto-lending</a> products on behalf of Genesis for a commission.</p><p>Last week, the US Securities and Exchange Commission (SEC) <a href=”https://www.financemagnates.com/cryptocurrency/sec-takes-gemini-genesis-to-court-for-selling-unregistered-securities/” target=”_blank” rel=”follow”>charged Gemini and Genesis for offering and selling unregistered securities</a> with crypto lending products. A <a href=”https://www.financemagnates.com/cryptocurrency/news/gemini-winklevoss-twins-face-class-action-lawsuit-over-lending-products/” target=”_blank” rel=”follow”>civil class-action lawsuit</a> filed earlier also alleged Gemini Earn products to be unregistered securities and accused the companies of bypassing mandatory disclosures.</p><p>Meanwhile, Genesis and Gemini are feuding over a debt of $900 million. Cameron Winklevoss, the Co-Founder of the crypto exchange Gemini, accused the CEO of Digital Currency Group, Barry Silbert, of acting out using “bad faith stall tactics” to resolve the payment.</p><p>The debts came from the Earn users with the lending products. When Genesis halted the withdrawals, there were 340,000 customers of the Earn Product, with assets of around $900 million. Now, if the company files for bankruptcy, these customers have to wait for lengthy proceedings to receive their proceeds.</p>
This article was written by Arnab Shome at www.financemagnates.com.
