Crypto brokerage firm Genesis Global Capital, which is estimated to owe creditors US$3 billion, may file for bankruptcy as early as this week, Bloomberg reported, citing unnamed people familiar with the situation.
See related article: SEC in the U.S. charges Genesis, Gemini with selling unregistered securities
- Genesis, a subsidiary of Digital Currency Group (DCG), is still in talks with creditors and the bankruptcy filing plans could change, Bloomberg reported.
- Genesis owes creditors more than US$3 billion and DCG may sell parts of its venture capital holdings to help make the repayments, the Financial Times reported last week.
- Genesis suspended user withdrawals on Nov. 16 after the failure of the FTX exchange, citing “abnormal withdrawal requests” that exceeded its liquidity at the time. Genesis also said it has US$175 million of its assets locked in the bankrupt FTX.
- Following the suspension, New York-based Gemini and South Korea’s GOPAX crypto exchanges halted withdrawals in their interest-bearing programs that had Genesis as their trading partner.
- Prior to the FTX collapse, Genesis was also exposed to the bankrupt crypto hedge fund Three Arrows Capital (3AC), where parent company DCG claims to have assumed part of the liabilities.
- The full consequences of a Genesis bankruptcy filing on investors in DCG are unclear, but at the least they will see their holdings diluted, according to a report in The Information. DCG investors include SoftBank, which wrote off a US$100 million stake in the collapsed FTX in November. Others include Bain Capital, Ribbit Capital and Alphabet’s CapitalG growth fund.
- In addition, DCG-owned crypto media outlet CoinDesk confirmed with Bloomberg that it is exploring options of partial or full sale with New York-based Lazard as a financial adviser.
- Genesis Global Capital did not immediately respond to Forkast’s emailed request for comment.