Genesis announced late Thursday evening that it filed for bankruptcy. This followed reports earlier in the day <\/strong><\/a>citing anonymous sources that it was gearing up to do so.<\/p>\n Genesis is the latest casualty of a bruising \u201ccrypto winter,\u201d which saw the Terra blockchain ecosystem\u2019s collapse (and rebirth) and the fall of major centralised cryptocurrency exchange FTX.<\/p>\n Luno is a sister company to Genesis, which it also used as a lending partner for its Savings Wallet product.<\/p>\n In essence, Luno would entrust Genesis with lending out customers\u2019 cryptocurrency to generate yield, paid to clients as monthly interest.<\/p>\n It should be noted that this Savings Wallet was strictly opt-in, with Luno providing disclosures about what the product is when customers sign up for it.<\/p>\n Buying and selling cryptocurrency on Luno uses its standard wallet, not the Savings Wallet feature.<\/p>\n Regardless, Luno took steps to insulate itself and its customers from Genesis\u2019s implosion in November.<\/p>\n As a result, when Luno halted its Savings Wallet<\/strong><\/a> product two weeks after Genesis halted redemptions<\/strong><\/a>, it could return all customer funds.<\/p>\n This is in stark contrast to Gemini, the major cryptocurrency exchange founded by Cameron and Tyler Winklevoss.<\/p>\n Its Gemini Earn product worked similarly to Luno\u2019s Savings Wallets, allowing customers to deposit cryptocurrency into a separate account and earn interest.<\/p>\n However, when Genesis halted redemptions, Gemini Earn customers also couldn\u2019t withdraw their balances.<\/p>\n Court documents show that Genesis Global Holdco LLC, plus subsidiaries Genesis Global Capital LLC and Genesis Asia Pacific Pte, filed for Chapter 11 protection in the Southern District of New York.<\/p>\n Genesis Global Capital listed the same range, $1 billion to $10 billion, for both assets and liabilities, as well as over 100,000 creditors \u2014 the top 50 unsecured claims amount to about $3.4 billion (R58.7 billion).<\/p>\n Genesis plans to use the Chapter 11 process to try to sell assets or raise money, with creditors ending up owning the reorganised business if those efforts are unsuccessful, it said<\/a><\/strong> in a statement.<\/p>\n The company intends to use $150 million (R2.6 billion) of cash on hand to fund itself in bankruptcy.<\/p>\n Chapter 11 lets a firm continue operating while trying to work ways to repay creditors.<\/p>\n Parent company Digital Currency Group had been in confidential negotiations with various creditor groups amid a liquidity crunch.<\/p>\n Genesis had warned that bankruptcy was possible if it failed to raise cash.<\/p>\n Genesis Global Trading and other units involved in derivatives, spot trading, and custody businesses aren\u2019t part of the bankruptcy filing.<\/p>\n Financial pressure at Barry Silbert\u2019s DCG began to emerge following the collapse of hedge fund Three Arrows Capital last year caused by its overexposure to Terra<\/strong><\/a>.<\/p>\n Genesis\u2019s lending unit suspended withdrawals in November, soon after FTX \u2014 where Genesis held some of its funds \u2014 filed for bankruptcy.<\/p>\n Digital assets have shed about $2 trillion since a peak in 2021, and many crypto lenders have struggled in the selloff.<\/p>\n According to Genesis\u2019s statement, redemptions and loan originations at its lending operation remain suspended, and claims will be handled in bankruptcy court.<\/p>\n Silbert is locked in an escalating battle<\/strong><\/a> with Gemini crypto exchange co-founder Cameron Winklevoss, whose customers have lost access to $900 million of funds that were placed with Genesis.<\/p>\nGenesis bankruptcy<\/h2>\n
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