Genesis Global Trading, a subsidiary of Digital Currency Group (DCG), filed for Chapter 11 bankruptcy in the Southern District of New York (SDNY) court last Thursday night. The filing, which includes Genesis Global Holdco and two of its lending business subsidiaries, Genesis Global Capital and Genesis Asia Pacific, comes after a series of attempts from the company to stay afloat. In this article, we will explore the backstory of Genesis, the broader problems facing the crypto sector, and the implications of the bankruptcy filing for customers and stakeholders.
The Genesis Backstory
Genesis Global Trading is a subsidiary of Digital Currency Group (DCG), a crypto conglomerate that owns a number of digital currency-related businesses, including Grayscale, CoinDesk, Foundry, Luno, and TradeBlock.
Broader Problems for the Whole Crypto Sector
The crypto sector has been facing a number of challenges in recent months, including regulatory scrutiny and market volatility. These challenges have both affected and been affected by a number of huge companies in the sector, including the Luna fiasco last May and the FTX crash in November. In November last year, Genesis halted withdrawals and new loans and then warned of possible bankruptcy filings. The writing has been on the wall with this one, unfortunately.
What Went Wrong at Genesis
However, Genesis's bankruptcy filing follows a series of attempts to stay afloat. The firm struggled to cut 30% of its staff in early January but it has made a difference. Layoffs have been a common theme recently, with big tech players like Microsoft and Google cutting huge swathes of their respective workforces. However, these are not linked as the broader tech environment and the crypto sector have never really overlapped with the Web3 narrative never really taking hold on a grand scale.
Broadly speaking, it is the broader cypto sentiment that has hurt Genesis. The company took a financial hit from major catastrophic crypto events last year like the collapse of crypto hedge fund Three Arrows Capital, brought on in part by the Luna collapse, and the decline of the crypto exchange FTX mentioned above.
The Genesis Bankruptcy Filing
The bankruptcy filing, which includes Genesis Global Holdco and two of its lending business subsidiaries, Genesis Global Capital and Genesis Asia Pacific, is a voluntary petition under the bankruptcy code for SDNY. The press release stated that:
“Genesis's other subsidiaries involved in the derivatives and spot trading and custody businesses and Genesis Global Trading are not included in the filing and continue client trading operations.”
What It Means for You
The bankruptcy filing is a significant event for Genesis customers and stakeholders. It's likely to result in a restructuring of the company and potentially a change in ownership. In the short term, customers may experience disruptions to their trading operations. However, Genesis has stated that it has over $150 million in cash, which it plans to use as liquidity to support its ongoing operations and facilitate its restructuring process. It is important to keep an eye on developments and seek professional advice if you are affected by bankruptcy filing.
Thank you for being a Ghacks reader. The post Genesis, DCG's Crypto-Lending Subsidiary, Files for Chapter 11 Bankruptcy: What You Need to Know appeared first on gHacks Technology News.
0 Commentaires