Cryptocurrency lender Genesis Global Capital filed for Chapter 11 bankruptcy protection in New York on Friday, marking the latest fallout from last year's collapse of FTX, the exchange founded by Sam Bankman-Fried.
A court documents showed that Genesis holds $5.1 billion in liabilities in the weeks following its withdrawal freeze on Nov. 16.
The Chapter 11 filing is a long time coming for Genesis, a wholly-owned subsidiary of the Digital Currency Group, which took major losses beginning in June of last year and ultimately could no longer operate following the collapse of crypto exchange FTX.
Started in 2013, Genesis aimed to be the first all-in-one Wall Street prime broker for digital assets.
The company launched its over the counter lending business in March of 2018 and by the fourth quarter, it had originated $500 million in loans in Q4 and had $1.1 billion loans in total for the accounting year.
Exactly three years later, at the height of crypto craze, the lending desk's loan originations exploded to $50 billion for the quarter and $131 billion for 2021.
Genesis Global Holdco LLC and two of its lending subsidiaries — Genesis Asia Pacific Pte. Ltd and Genesis Global Capital, LLC — filed for Chapter 11 bankruptcy protection in the bankruptcy court for the Southern District of New York.
"While we have made significant progress refining our business plans to remedy liquidity issues caused by the recent extraordinary challenges in our industry, including the default of Three Arrows Capital and the bankruptcy of FTX, an in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all Genesis stakeholders," Genesis Interim CEO Derar Islim said in a statement.
Although the company said it has over $150 million in cash on hand to provide liquidity, support its ongoing business operations and facilitate the restructuring process, it listed more than 100,000 creditors in its bankruptcy filing, in which liabilities range from $1.2 billion to as high as $11 billion.
Genesis Global Holdco LLC is the parent company of the crypto lender Genesis Global Capital, while it is owned by DCG — the owner of digital currency asset management firm Grayscale Investments that had around $50 billion funds under management in 2021.
Genesis' financial troubles echoes other crypto firms' financial struggles last year, which was dubbed as "crypto winter" and included FTX, Three Arrows Capital, Voyager, Celsius and BlockFi.
