Burdened by billions of dollars in debt, including $900 million to crypto exchange Gemini, crypto lending platform Genesis is officially declaring bankruptcy.
In a statement, Genesis says it has begun a restructuring under U.S. Chapter 11 protection to “advance ongoing discussions with stakeholders and optimize outcomes for Genesis customers and Gemini Earn users.”
Chapter 11 protects a company from its creditors during a bankruptcy filing and restructuring process to save the company from total liquidation.
In order to avoid bankruptcy, Genesis’ interim CEO Derar Islim recently asked his clients for more time to find a solution.
Genesis thus joins other crypto lending platforms, such as Celsius Network, BlockFi or Voyager Digital, which have also gone bankrupt in recent months, against the backdrop of a crypto winter that is setting in for the long haul.
In its announcement, Genesis mentions a restructuring plan to find a solution that could result in a sale transaction, capital raise and/or shareholding.
As part of its Chapter 11 filing, Genesis proposed a roadmap to an exit that includes a Chapter 11 plan (the “Plan”) that calls for a framework for a comprehensive resolution of all claims across, and the creation of a trust that would distribute assets to, creditors.
The Plan contemplates a two-track process in pursuing a sale, capital raising and/or equity transaction that would allow the company to emerge under new ownership.
The company will initiate a marketing and sales process to monetize GGH’s assets or otherwise raise capital, using the proceeds to pay creditors in a fair and equitable manner.
If the marketing process does not result in a sale or capital increase, creditors will receive equity interests in the reorganized GGH,” the Genesis statement said.
Genesis reportedly owes around $4 billion to 50 creditors, according to the bankrupt crypto company’s filings.