Crypto lender Genesis going into liquidation? At least the company now faces a new threat. After filing for bankruptcy in January, a restructuring plan was supposed to save the ailing company. However, the bailout plan fell through for the time being after creditors rejected it.
Rescue plan fails for the time being
Genesis files for bankruptcy in January due to illiquidity . Previously, the crypto scene was already rumored that the giant lender could also collapse due to the protracted bear market and collapsed partners.
The fear ultimately comes true. Genesis is considered to be the sword of Damocles due to the amount of money kept and numerous partners. Parent company Digital Currency Group (DCG) quickly calmed the scene. The company will be saved successfully, according to the information.
A restructuring plan was planned for this, which recently failed, as the DCG itself announced on Twitter. The venture capital company writes disappointed:
The creditors have backed down and made new demands.
Therefore, one now demands the provision of an intermediary by the competent court. The fact that this requirement is necessary at all is a major setback for the company. In February, it was publicly announced that an agreement had been reached with the largest creditors.
Genesis will be liquidated?
According to current information, a liquidation of Genesis is not to be expected. However, the lender’s balance sheet is deep in the red. The DCG subsidiary owes more than USD 3.5 billion to the 50 largest institutional lenders.
Genesis partnered with service providers such as crypto exchanges to collect these funds in the form of various cryptocurrencies. In return, mostly private lenders were promised stable returns.
These people have been waiting for their money since November 2022. At that time, Genesis stopped paying out deposits to lenders. Previously, they were able to withdraw their invested assets at any time.
As a result, a conflict arose between the crypto exchange Gemini and the DCG. Gemini demands the release of customer funds as a representation of their customers. The trading platform was one of many services that provided an interface to Genesis.
Because Genesis closed its doors in November, a wave of outrage hit Gemini. The company blamed its business partner and has since profiled itself as a protector of the little man on Twitter. The management threatens to sue the DCG.
How the debacle for private investors will continue is so far unclear. Genesis falls under the “too big to fail” category for many experts. Especially with the DCG in the back, the backlog was considered manageable.
