• Genesis filed for bankruptcy on Friday, two months after the crypto lender halted withdrawals due to the FTX collapse.
  • Stellar Foundation emerged as one of Genesis’ largest creditors with a $13 million claim.
  • Genesis and Gemini were recently charged by the SEC for violating Securities law by offering unregistered securities through their Earn program.

Genesis Global Capital emerged as one of the most highly impacted crypto companies from the FTX collapse leading to the lending platform filing for bankruptcy. The crypto lender’s parent company Digital Currency Group and its CEO Barry Silbert who were voicing support for Genesis, also pulled back following the bankruptcy filing.

Genesis prepares for hearing

Less than 24 hours after filing for bankruptcy on Friday, court filing indicates that Genesis Global Capital’s first day hearing in the case is set for January 23. The Chapter 11 proceedings will begin on Monday, with Digital Currency Group backing off, leaving Genesis to defend itself.

Barry Silbert was always at the forefront when it came to Genesis during their bouts with Gemini founder Cameron Winklevoss. However, at the moment, both Silbert and DCG stood far away from the bankrupt crypto lender. In a statement, DCG stated,

“Genesis has its own independent management team, legal counsel, and financial advisors, and appointed a special committee of independent directors, who are in charge of the Genesis Capital restructuring, and who recommended and decided that Genesis Capital file chapter 11. Neither DCG nor any of its employees...were involved in the decision to file for bankruptcy.”

The statement went on to mention that Digital Currency Group still owes Genesis Capital about $526 million, which is due in May 2023, and another $1.1 billion in the form of a promissory note which is set to mature in June 2032. Regardless DCG stated that it would work with Genesis to help the crypto lender’s creditors.

On the other hand, both Genesis and Gemini are currently facing charges from the Securities and Exchange Commission (SEC). According to the regulatory body, the companies violated the securities law with their Earn program as they were found selling unregistered securities to retail investors.

Stellar becomes a victim

Genesis clarified that of Genesis multiple branches of the lending entities have filed for chapter 11 bankruptcy. Its Global Trading arm and spot and derivatives trading arm continue to remain operational and unimpacted.

Although Stellar Development Foundation did emerge as one of the four biggest creditors of Genesis, claiming almost $13 million against Genesis, the foundation stated that the amount was minuscule in comparison to its treasury.

Stellar treasury currently holds close to 30 billion XLM tokens which at the moment are worth more than $200 million. This is why the foundation is bearing no impact from Genesis’ bankruptcy filing.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Recommended content

Recommended Content

Editors’ Picks

Why crypto may see a recovery right before or shortly after Bitcoin halving

Why crypto may see a recovery right before or shortly after Bitcoin halving

Cryptocurrency market is bleeding, with Bitcoin price leading altcoins south in a broader market crash. The elevated risk levels have bulls sitting on their hands, but analysts from Santiment say this bleed may only be cauterized right before or shortly after the halving.

More Cryptocurrencies News

Manta Network price braces for volatility as $44 million worth of MANTA is due to flood markets

Manta Network price braces for volatility as $44 million worth of MANTA is due to flood markets

Manta Network (MANTA) price was not spared from the broader market crash instigated by a weakness in the Bitcoin (BTC) market. While analysts call a bottoming out in the BTC price, the Web3 modular ecosystem token could suffer further impact.

More Manta Network News

Bitcoin price uptrend to continue post-halving, Bernstein report says as traders remain in disarray

Bitcoin price uptrend to continue post-halving, Bernstein report says as traders remain in disarray

Bitcoin is dropping amid elevated risk levels in the market. It comes as traders count hours to the much-anticipated halving event. Amid the market lull, experts say we may not see a rally until after the halving. 

More Bitcoin News

OMNI post nearly 50% loss after airdrop and exchange listing

OMNI post nearly 50% loss after airdrop and exchange listing

Omni network (OMNI) lost nearly 50% of its value on Wednesday after investors dumped the token following its listing on top crypto exchanges. A potential reason for the crash may be due to the wider crypto market slump.

More Omni Network News

Bitcoin: BTC’s rangebound movement leaves traders confused

Bitcoin: BTC’s rangebound movement leaves traders confused

Bitcoin (BTC) price has been hovering around the $70,000 psychological level for a few weeks, resulting in a rangebound movement. This development could lead to a massive liquidation on either side before a directional move is established. 

Read full analysis