Genesis is a cryptocurrency lending firm that is a subsidiary of the Digital Currency Group. The firm previously stated that filing for bankruptcy seemed to be a better alternative. The main reason for believing so was to make things easier if it failed to generate revenue amid a liquidity crunch. FTX faced a similar issue that inevitably led to its downfall. Keeping this situation in mind, it is expected that Genesis will file for bankruptcy by next week. However, the firm is under continuous discussions with creditors, and there is a possibility of the plans changing.
Genesis faced a severe financial crisis right after the collapse of Three Arrows Capital. Similarly, the firm even had to suspend withdrawals after FTX filed for bankruptcy. It is necessary to keep in mind that Genesis had a chunk of its funds in the exchange as well. These two cases imposed a harsh effect on the crypto exchange. Similarly, Gemini Earn, which offered users to earn rewards for lending their tokens through Genesis, was also stopped. However, Genesis is still working to resolve its problems.
The co-founder of Gemini, Cameron Winklevoss, stated that Genesis owed the firm approximately $900 million for funds. These funds were handed over to the exchange as part of the Gemini Earn program. Considering the statement as a serious allegation, Digital Currency Group stated that the allegation was malicious and baseless.
What’s next for GeNesis?
As of now, Genesis is working tirelessly towards the development of a restructuring plan. At the same time, the firm even swapped a number of proposals with the creditors. Some of these creditors suggested receiving an amalgamation of cash and equity from the DCG. In addition, the DCG even came forward with the announcement that it would suspend its quarterly dividends.
The step is being put into effect in an effort to cut down expenses and conserve cash. Genesis previously reported that it might have to sell its assets to raise funds considerably. However, it is still undecided if the firm would choose to go for a partial or a full sale. Currently, DCG states that it is working to improve its balance sheet by reducing operating expenses. This includes preserving liquidity as well.
