Cryptocurrency lender Genesis Global Holdings Co filed for bankruptcy on Thursday, in the latest collapse since the swift downfall of FTX.
The company filed for Chapter 11 protection in the Southern District of New York, court documents show.
It plans to use the court process to try to sell assets or raise money, Genesis said in a statement, adding that if that process is unsuccessful, creditors would own the reorganized business.
Photo: AP
The company said it would use its US$150 million of cash on hand to fund itself in bankruptcy. Chapter 11 filings allow a firm to continue operating while working out a plan to repay creditors.
Parent company Digital Currency Group had been in confidential negotiations with various creditor groups amid a liquidity crunch, and Genesis had warned that it might need to file for bankruptcy if it fails to raise cash, Bloomberg News previously reported.
Genesis Global Trading and other units involved in trading and custody are not part of the bankruptcy filing.
Financial pressure at Digital Currency Group began to emerge following the collapse of hedge fund Three Arrows Capital Ltd.
Genesis suspended withdrawals in November last year, soon after crypto exchange FTX — where Genesis held some of its funds — filed for bankruptcy.
Redemptions and loan originations at the company remain suspended, and claims would be handled in bankruptcy court, the statement said.
Genesis laid off about 30 percent of its staff this month in its latest round of job cuts.
Genesis interim chief executive officer Derar Islim earlier sent a letter to clients saying it needed “additional time” to come up with a solution for a liquidity crunch at the lending unit.
Digital-asset prices weakened as crypto markets absorbed the developments. Bitcoin was little changed at US$21,000 after earlier advancing as much as 1.3 percent. The token is up 28 percent this year, paring some of last year’s deep rout.
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