Cryptocurrency lender Genesis has filed for Chapter 11 bankruptcy in the Southern District of New York.
The firm has estimated liabilities of $1 billion to $10 billion and assets in the same range, according to the Jan. 19 filing.
Earlier reports claimed the company had been considering filing for bankruptcy protection if it was unable to raise capital to stem its liquidity crisis.
In a Jan. 19 press release, Genesis said it had been engaged in discussions with its advisors “to its creditors and corporate parent Digital Currency Group (DCG) to evaluate the most effective path to preserve assets and move the business forward.”
“Genesis has now commenced a court-supervised restructuring process to further advance these discussions.”
The company’s Chapter 11 plan sees it contemplating a “dual track process” pursuing a “sale, capital raise, and/or an equitization transaction” that would apparently enable the business “to emerge under new ownership.”
The derivatives, spot trading, broker-dealer and custody businesses of Genesis are not part of the Chapter 11 proceedings and will continue operations according to the firm.
It also claimed to have more than $150 million in cash on hand that it believes “will provide ample liquidity to support its ongoing business operations and facilitate the restructuring process.”
The restructuring process will be led by an “independent special committee” of the company’s board of directors, and Genesis says the process is aimed at providing “an optimal outcome for Genesis clients and Gemini Earn users.”
The firm suspended withdrawals from its platform in November amid market turbulence caused by the collapse of FTX. Earlier in January the company laid off a further 30% of its workforce, the second round of job cuts in six months.
This is a developing story, and further information will be added as it becomes available.