- There have also been reports that the Winklevoss twins are one of the interested parties willing to serve as a creditor for Genesis.
- Genesis’ problems were further compounded last week when the US financial watchdog (SEC) alleged that Genesis’ crypto lending products are unregistered securities.
Following its insolvency issues, Digital Currency Group’s crypto lending subsidiary, Genesis global, has been in talks with several creditors. However, multiple reports claim that Genesis has hinted that it might file for bankruptcy if it fails to raise funds from creditors.
Genesis bankruptcy plan
There have also been reports that the Winklevoss twins are one of the interested parties willing to serve as a creditor for Genesis. The reports further claimed that the twins have agreed to a 2-year forbearance period for the prepackaged bankruptcy plan. Furthermore, this remission period applies to most of the payments.
In addition, part of the bankruptcy plan is for creditors to own shares of the crypto-lending firm besides receiving cash repayments from Genesis. Suppose the reports about the Winklevoss’ twins’ interest are genuine. In that case, it won’t be surprising given that one of the twins, Cameron, was recently embroiled in a Twitter fight with Digital Currency Group founder Barry Silbert.
Cameron Winklevoss alleged that Silbert was negotiating like he didn’t have a genuine interest in the long-term success of the DCG subsidiary. He further accused the DCG CEO of wrongly managing the crypto conglomerate’s finances. In a recent letter, Cameron suggested that the DCG CEO resign from his position following the firm’s failure to refund $900 million in customer funds.
Proof of weak financials
In its shareholders’ letter dated January 17, 2023, DCG wrote that it would pause quarterly dividends to its clients to save capital. However, experts were quick to point out that a pause on dividends is an indication of the firm’s weak financials. Meanwhile, the discussions between DCG, creditors, and Genesis haven’t yielded fruitful results, even though they have considered various approaches.
The creditors’ groups are represented in the discussions by Kirkland & Ellis and Proskauer Rose. Silbert’s DCG has been under intense financial scrutiny following the failure of the crypto hedge fund Three Arrows capital. It is also worth mentioning that Genesis had some exposure to FTX, which filed for bankruptcy last November.
Following FTX’s bankruptcy filing, Genesis paused withdrawals almost immediately. This withdrawal pause negatively affected the Gemini Earn program, as the platform had to cease redemption requests. The Earn program is an initiative of the Gemini Trust crypto exchange. It allows Gemini Earn users to lend their crypto assets on Genesis and earn rewards for doing so.
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Genesis’ problems were further compounded last week when the US financial watchdog (SEC) alleged that Genesis’ crypto lending products are unregistered securities. The US Securities and Exchange Commission (SEC) also accused Gemini of the same offense, claiming that its Gemini Earn product is an unregistered security. According to reports, Genesis global may file for bankruptcy before this week is over.
Another bankruptcy filing in the crypto industry will undoubtedly have enormous consequences as the fledgling industry is still struggling to cope with the effects of FTX’s collapse. Hence, the crypto market might be in for another bearish period, but definitely not bad enough to unrecoverable levels. After all the market has already recovered from the FTX crisis.
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