In the aftermath of FTX’s unexpected demise, bitcoin lender Genesis Global Capital filed for bankruptcy, becoming the most recent business to fall.
In the Southern District of New York, the business filed for Chapter 11 bankruptcy on Thursday, according to court documents. Its petition mentioned the same expected asset and liability range of $1 billion to $10 billion.
As a result of a liquidity situation, parent company Digital Currency Group is in private discussions with a number of creditors, and Genesis had previously warned that it could have to file for bankruptcy if it couldn’t get funding, according to News.
Financial pressure began to mount at Barry Silbert’s DCG after the demise of the hedge fund Three Arrows Capital. Genesis stopped making withdrawals in November, shortly after the cryptocurrency exchange FTX, where some of its funds were kept, filed for bankruptcy.
As part of its most recent wave of layoffs, Genesis fired around 30% of its employees in January. Derar Islim, the interim CEO, wrote to clients yesterday to let them know that solving the liquidity issue in the loan sector will require “extra time.”
In a prior statement, Islim claimed that “abnormal withdrawal demands” made after FTX’s insolvency had surpassed Genesis’s available cash.
Markets for cryptocurrencies appeared to welcome the advances. At 1:31 in the afternoon in Tokyo, bitcoin gained by almost 1% to $21,115 and is now up 28% for 2023, correcting some of the fall from the previous year.