According to recent reports, the cryptocurrency lending company Genesis is mulling the possibility of filing for bankruptcy.
According to a WSJ report from January 5 that cited “people familiar with the matter,” Genesis is considering declaring bankruptcy and has let go of about 30% of its workers.
There were 145 people left at the company after the layoffs, which affected numerous departments. According to the article, the company has hired an investment bank and financial consultancy firm Moelis & Co. to assess its alternatives for the future, which may include filing for Chapter 11.
A firm representative told the media outlet:
“As we continue to navigate unprecedented industry challenges, Genesis has made the difficult decision to reduce our head count globally. These measures are part of our ongoing efforts to move our business forward.”
Genesis’s Problems Grow
The cryptocurrency brokerage has been in the news this week as a result of Gemini co-founder Cameron Winklevoss’s criticism of its CEO, Barry Silbert. Genesis received money from Gemini, which now wants it back.
Following the FTX bankruptcy, the Winklevii-led exchange stopped accepting withdrawals since it had significant exposure to the now-defunct crypto behemoth and its venture arm Alameda. Additionally, it provided a $2.4 billion loan to the now-defunct hedge fund Three Arrows Capital (3AC).
At the same time, Genesis also stopped new loan applications and redemptions. As a result, Gemini and its yield partner Genesis had $900 million in customer assets locked up.
Genesis tried to raise $1 billion in rescue money in November, threatening to go bankrupt if it failed. That premise is now a lot more plausible.
The company “needs more time to resolve the financial crisis brewing in its loan division and has made headway in reducing costs in its business lines,” according to interim chief executive Derar Islim.
Additionally, Grayscale, which is also a part of the Digital Currency Group (DCG), the parent company of Genesis, has also been damaged. Grayscale’s Bitcoin Trust (GBTC), in which DCG has a sizable holding, may require liquidation.
