Genesis Global: A Closer Look
According to the documents filed in bankruptcy court by Genesis Global and its associated organizations, the parent company, Digital Currency Group (DCG), owes its subsidiaries more than $1. 65 billion.
The holding firm Genesis Global Holdco (GGH), the lender Genesis Global Capital (GGC), and Genesis Asia Pacific are the three organizations that have sought protection under bankruptcy laws (GAP).
DCG owes subsidiaries more than $1.65 billion
A declaration was filed at the end of January with the bankruptcy court of the Southern District of New York (SDNY) by Paul Aronzon, a member of a special committee of the board of directors of GGH, the holding company of the Genesis Global entities. It said that DCG's debt to Genesis includes loans of $575 million, due in May of this year, and a $1.1 billion promissory note due in June 2032.
The special committee is investigating the lending operations between GGC and DCG to evaluate whether or not the defunct companies have any legitimate claims against DCG connected to these transactions that could benefit the restructuring process.
Lev Dassin, a former acting US Attorney for New York's Southern District, is in charge of the investigation by the legal firm Cleary Gottlieb Steen & Hamilton LLP, which also represents Genesis in the proceedings.
To be more specific, the investigation is looking into the lending of "approximately $850 million in unsecured loans to the DCG entities, the DCG (promissory) note, various transactions that restructured the $850 million in unsecured loans in November 2022, and DCG's purported exercise of a $52.5 million set-off in November 2022.
Additionally, the committee is looking at potential avoidance actions and the different types of actions that can be taken around DCG entities, Gemini Trust Company, LLC, and other Genesis lenders.
When a debtor takes action to avoid or annul certain fund transfers before filing for protection under Chapter 11, this is known as an avoidance action. The January filings are another chapter in a series of high-profile failures that have shaken the cryptocurrency industry over the past year.
These failures include the implosion of the Terra cryptocurrency exchange and the collapse of the FTX cryptocurrency exchange. Genesis became entangled in the failures of the hedge fund Three Arrows Capital and FTX. Both of these businesses eventually went bankrupt. Genesis was compelled to restrict withdrawals in its lending unit shortly after FTX filed for Chapter 11 bankruptcy in November.
Gemini, the cryptocurrency exchange owned by Cameron and Tyler Winklevoss, was a key customer of Genesis's lending business and was one of the reasons for the suspension. Since then, CEO Cameron Winklevoss has been running an open campaign against Genesis, DCG, and the company's CEO, Barry Silbert.
Before it filed for protection under Chapter 11, Genesis Global had attempted to obtain new cash or negotiate a settlement with its creditors. According to the documents filed in the bankruptcy case, the corporation owed $3.5 billion to its top 50 creditors.
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