Bankruptcy court documents filed by Genesis interim CEO Derar Islim show that the now-defunct crypto lending platform owed $5.1 billion to its creditors weeks before it paused withdrawals following the FTX collapse.
Genesis begins bankruptcy proceedings
Today, troubled crypto lending service Genesis filed for chapter 11 bankruptcy protection in the Southern District of New York’s bankruptcy court. Its chief executive gave a breakdown of the company’s financial state leading to its collapse in November 2022.
Interim CEO Derar Islim revealed to the court that the company accrued $5.1 billion in liabilities before its lending platform paused withdrawals following Genesis’ exposure to the FTX contagion.
Two other entities aside from Genesis Global Capital LLC also filed for bankruptcy earlier today: Genesis Global Holdco, its parent company, and another lending unit, Genesis Asia Pacific.
In his first-day motion at the New York court, Islim gave a detailed account of the events leading to the firm’s collapse, stating that the crisis was triggered by its exposure to Sam Bankman-Fried’s FTX as well as its customers’ panic which led to a “run on the bank.”
He added that the bankruptcy proceedings will “incentivize all stakeholders to move expeditiously toward a consensual resolution that avoids the costs and uncertainty of litigation.”
Out of the $5.1 billion which Genesis owes its creditors, Gemini, owned by the Winklevoss twins, holds the largest share, currently at about $900 million.
There has been a war of words between the heads of both companies recently. On Jan. 10, Cameron Winklevoss called for DCG CEO Barry Silbert’s removal, citing concerns about his managerial capacity. DCG (Digital Currency Group Inc.) is the parent company of Genesis Global.