In the weeks following the implosion of fellow cryptocurrency exchange FTX, Genesis Global Holdco has officially filed for bankruptcy.
The company and a pair of its subsidiaries, Genesis Asia Pacific and Genesis Global Capital, put in official bankruptcy petitions with the United States Bankruptcy Court for the Southern District of New York. Genesis Global Trading, along with all of its other subsidiaries, are expected to continue normal operations.
“While we have made significant progress refining our business plans to remedy liquidity issues caused by the recent extraordinary challenges in our industry, including the default of Three Arrows Capital and the bankruptcy of FTX, an in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all Genesis stakeholders,” explained Genesis Interim CEO Derar Islim as part of a press release.
The company is currently thinking about going through a restructuring process which may involve a capital raise or a different transaction that could allow the business to fall under the watch of new management. “We have crafted a deliberate process and roadmap through which we believe we can reach the best solution for clients and other stakeholders,” explained the independent director at Genesis, Paul Aronzon.
Currently, the company is owned by Digital Currency Group, which also maintains a number of investments in the highly popular exchange platform Coinbase along with a few dozen other cryptocurrency companies. Just over two months ago, Genesis reportedly stopped withdrawals and all new loan originations. Company leadership was reportedly taking part in conversations to try and secure an investment from the cryptocurrency platform Binance.
This bankruptcy takes place in the wake of recent reports revealing that FTX CEO Sam Bankman-Fried chose to intertwine funds across the exchange platform and sister trading company Alameda Research. One lending platform, BlockFi, also filed for bankruptcy just a scant few days after FTX was labeled as insolvent, while both Celsius and Voyager had previously declared bankruptcy a few months prior as the financial sector was forced to deal with a bear market.
Currently, close to 60% of the American public now considers all cryptocurrency investments as “high” risk, according to a recent survey carried out by CNBC and Momentive. An additional 26% see cryptocurrencies as moderately risky, with just a scant 10% saying that these investments post “little” risk at all.
The events surrounding FTX have pushed legislators to sound the call for much heavier scrutiny and regulation throughout the cryptocurrency sector.