Genesis Claims $5.1 bn In Liabilities
According to bankruptcy court documents signed by interim CEO Derar Islim, cryptocurrency lending firm Genesis held $5.1 billion in liabilities in the weeks following its withdrawal freeze last November.
In his first-day motion in the United States Bankruptcy Court for the Southern District of New York, Islim detailed Genesis’ financial situation prior to its restructuring. Genesis HoldCo, Genesis Global Capital LLC, and Genesis Asia Pacific PTE. LTD filed for Chapter 11 bankruptcy protection on January 19th, becoming the latest crypto firm to be caught up in the immediate aftermath of FTX’s implosion.
These entities were possibly less affected by direct losses to FTX and sister company Alameda than by the “run on the bank” that Islim claimed their collapse triggered. Customers demanded that Genesis repay $827 million in loans, forcing its lending units to halt withdrawals.
At least part of the liquidity crisis began months earlier, thanks to Genesis’ $1.2 billion loss to crypto hedge fund Three Arrows Capital (3AC), which failed in the summer of 2022. This loss was caused by the Genesis Asia Pacific unit, which managed Genesis’ lending relationship with 3AC. According to the filing, at the time of 3AC’s demise, Genesis had $2.4 billion in outstanding loans to the fund, of which Genesis was able to recover only half.
Islim said the bankruptcy proceedings “incentivize all stakeholders to move expeditiously toward a consensual resolution that avoids the costs and uncertainty of litigation.”
Genesis continues to operate most of its non-lending businesses, Islim said. That includes its derivatives, trading, and custody wings, all of which are held in separate legal entities that did not file for bankruptcy.
(With inputs from Shikha Singh)
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