Genesis Capital’s Settlement Disrupted by Creditors

Genesis Capital, a troubled digital currency company, has hit another roadblock in its settlement process, just two months after reaching an initial agreement with creditors. The company’s parent firm, Digital Currency Group (DCG), has issued a statement on Twitter announcing that Genesis has filed a motion for mediation due to renewed demands from creditors.

In February, Genesis Capital submitted a comprehensive settlement proposal to the bankruptcy court after reaching an “agreement in principle” with DCG and its creditors. Under the proposed restructuring plan, Genesis creditors were expected to recover 80% of funds lost due to the company’s collapsed operations.

However, DCG has now reported that Genesis creditors have raised their demands, significantly disrupting the ongoing court process. “While it is difficult to understand the rationale given the limited engagement from Genesis creditors since the February court filing, our understanding is that a subset of creditors have decided to walk away from the prior agreement,” DCG wrote.

The disruption has raised concerns about the timing of the settlement process, with some experts questioning whether the prolonged proceedings could harm the company’s chances of recovery. However, others have suggested that the additional mediation may ultimately help resolve outstanding issues and pave the way for a successful restructuring.

Genesis Capital’s struggles come amid broader uncertainty in the digital currency market, with many investors and companies grappling with regulatory challenges and price volatility. The company’s difficulties are particularly notable given its high profile in the industry; Genesis has been a leading provider of digital asset lending and borrowing services, with a portfolio of more than $15 billion in assets.

Despite these challenges, DCG expressed confidence in Genesis’ ability to weather the storm. “We believe that Genesis is well-positioned to continue to provide best-in-class digital asset services,” the company wrote. “We remain committed to working through these challenges in partnership with our creditors and the broader digital asset community.”

The case underscores the challenges facing digital currency companies as they navigate a rapidly evolving regulatory landscape and seek to establish themselves as viable players in the broader financial ecosystem. With Genesis’ future hanging in the balance, the industry will be closely watching to see how the settlement process unfolds in the coming months.


Tagged : / / / / /

Digital Currency Group Reports Over $1 Billion Loss Due to 3AC Collapse

Digital Currency Group (DCG), a cryptocurrency venture capital conglomerate, has reported losses of over $1 billion in 2022. The losses were primarily due to the collapse of Three Arrows Capital (3AC), a crypto hedge fund that DCG had invested in, and falling cryptocurrency prices.

According to DCG’s Q4 2022 investor report, the losses were mainly caused by the impact of 3AC’s default on Genesis, DCG’s lending arm. Genesis filed for Chapter 11 bankruptcy in late January, as it was 3AC’s largest creditor, having loaned the now-bankrupt hedge fund $2.36 billion. 3AC filed for bankruptcy in July 2022.

DCG’s fourth-quarter losses came to $24 million, while revenues came in at $143 million. Full-year revenues for DCG came in at $719 million, with total assets of $5.3 billion. DCG’s cash and liquid holdings amounted to $262 million, and its investments, such as shares in its Grayscale trusts, amounted to $670 million. The remaining assets were held by divisions of its asset management subsidiary Grayscale and DCG’s Bitcoin (BTC) mining business, Foundry Digital.

DCG’s equity valuation came in at $2.2 billion, with a price per share of $27.93, which the report said was “generally consistent with the sector’s 75%-85% decline in equity values over the same period.” However, the company said it “hit a milestone” with the restructuring of Genesis.

In February, DCG proposed an agreement that would see its equity share in Genesis’ trading entity contributed and all Genesis entities brought under the same holding company, with its trading entity sold off. DCG would also exchange an existing $1.1 billion promissory note due in 2032 for convertible preferred stock, and its existing 2023 term loans with an aggregate value of $526 million would be refinanced and made payable to creditors.

According to a Genesis creditor, the plan “has a recovery rate of approximately $0.80 per dollar deposited, with a path to $1.00” for those owed money by the firm.

DCG declared on November 1, 2021, that its valuation was more than $10 billion, following the sale of $700 million worth of shares to companies like Alphabet Inc., Google’s parent company. However, the recent losses have brought its valuation down significantly.

The collapse of 3AC and Genesis’ subsequent bankruptcy filing has had a major impact on DCG’s financials. The company will need to continue to navigate the volatile cryptocurrency market and work towards resolving its outstanding liabilities to regain investor confidence.


Tagged : / / / / /

Digital Currency Group Sells Shares in Subsidiary’s Crypto Funds

The cryptocurrency conglomerate known as Digital Currency Group (DCG) is apparently getting ready to generate cash and maintain its liquidity by selling its assets in cryptocurrency funds that are managed by a subsidiary of the company known as Grayscale Investments.

According to a report that was published on February 7 by the Financial Times, which cited United States securities filings, DCG sold approximately one quarter of its shares in Grayscale’s Ether (ETH)-based fund for approximately $8 per share, despite the fact that each share held a claim to nearly double that amount in ETH. The filings were cited in the report.

In addition to this, it is said to have sold down small share parcels in Grayscale’s Litecoin (LTC), Bitcoin Cash (BCH), and Ethereum Classic (ETC)-based trusts. This is in addition to its Digital Large Cap Fund, which is a single fund that invests in Bitcoin (BTC), Ether, Polygon (MATIC), Solana (SOL), and Cardano (ADA).

The response that DCG gave when queried about the share sales was that “it is just part of our regular portfolio rebalancing.”

In spite of this declaration, there are others who feel that Barry Silbert’s DCG might be heading for some kind of financial difficulty.

Another of its companies, the cryptocurrency lending business Genesis Global Capital, filed a bankruptcy petition on January 19 and is reported to owe its creditors more than $3 billion.

Companies controlled by DCG have been significantly impacted by the contagion that has resulted from FTX’s downfall. Over the last several weeks, these companies have been forced to let go of over 500 people.

However, DCG has taken a number of actions to maintain liquidity in 2023, such as informing its shareholders in a letter dated January 17 that it would be discontinuing its quarterly dividend payments as it seeks to improve its balance sheets. This was one of the many initiatives that DCG has done.

After stating that it had received offers for the cryptocurrency media outlet CoinDesk that were greater than $200 million, DCG has reportedly sought the assistance of the financial advisory firm Lazard in order to assist it in weighing up options to sell CoinDesk, which is another of its subsidiaries.

According to the company’s website, DCG’s venture capital portfolio includes about 200 crypto-related startups, some of which include Grayscale, Genesis, and CoinDesk. Additionally, DCG has interest in a number of other businesses, such as the cryptocurrency exchange Luno and the advising company Foundry.


Tagged : / / / / / / / / / / /

Genesis creditor reveals new proposed restructuring plan that will see creditors getting back

According to information provided by a Genesis creditor, the most recent suggested restructuring plan between Genesis, Digital Currency Group, and creditors would result in creditors receiving at least 80 percent of the monies they contributed.

The cryptocurrency trading and market-making arm of Genesis Global will eventually be sold as part of efforts to restructure the company, according to an announcement made by Genesis Global on February 6 stating that it had reached a “agreement in principle” with Digital Currency Group (DCG) and its creditors.

Genesis Global Holdco is the holding company for Genesis, and DCG would give its portion of stock in Genesis Global Trading, which is the brokerage subsidiary business of Genesis, to Genesis Global Holdco.

As a result of the acquisition, all Genesis-related firms would be consolidated under a single holding company.

Under the terms of the transaction, DCG will be exchanging an existing promissory note for convertible preferred shares. The note is for $1.1 billion and has a maturity date of 2032. It will also make its current 2023 term loans, which have a combined value of $526 million, due to creditors when it has refinanced them and increased their aggregate value.

As part of the arrangement, cryptocurrency exchange Gemini will also make a contribution of $100 million to help customers of its Gemini Earn service whose money are now locked with the insolvent company.

Genesis will attempt to put its then-owned Genesis Global Trading business up for sale in the event that it is able to do so prior to the completion of these transactions, which need the required clearance from the court.

The Genesis creditor and crypto yield platform Donut issued a user update on February 6 stating that the plan “has a recovery rate of about $0.80 every dollar invested, with a path to $1.00” for Genesis creditors.

It was also said that the amount that may be recovered is contingent on the “equity note, achieved liquidation prices, and takes into consideration the unknown expenditures connected with the continuation of this bankruptcy.”

The collapse of the cryptocurrency exchange FTX in November caused a liquidity issue at Genesis, which is presently being resolved by the company via the implementation of a reorganisation plan as part of its Chapter 11 bankruptcy proceedings.

At the time of the firm’s Chapter 11 filing, Genesis Global Trading was not mentioned in the paperwork, and Genesis Global Holdco said that the company will “maintain client trading activities.”

During the original bankruptcy hearing that took place in January, attorneys for Genesis said that the business was seeking a speedy resolution to the disagreements that it had with its creditors and expressed optimism that the company would emerge from the Chapter 11 procedures by the end of May.


Tagged : / / / /

Committee Appointed to Represent Unsecured Creditors in Genesis Global bankruptcy

According to documents filed with the court on February 4, a committee consisting of seven members has been constituted to represent the interests of unsecured creditors in the bankruptcy case involving Genesis Global.

The committee will act as the representatives of the creditors in court, and it will have the right to participate in the restructuring plan as well as the right to be consulted before to key decisions. In most cases, members are chosen at random from a list including the 20 biggest unsecured creditors.

Mirana Asset Management, which is a division of the cryptocurrency exchange Bybit, SOF International, Digital Finance Group, and the cryptocurrency exchange Bitvavo are some of the organisations that have been selected as members, along with three individual creditors: Amelia Alvarez, Richard Weston, and Teddy Andre Amadeo Goriss.

The United States Trustee is an executive branch institution under the Department of Justice that is responsible for managing bankruptcy proceedings. William Harrington, a spokesman for the United States Trustee, was the one who appointed the organisation. In the process of filing for bankruptcy, one of the most significant steps is to establish a committee of creditors.

Bitvavo is one of the largest creditors, having an exposure of more than $290 million; it is followed by Mirana, which has an exposure of $150 million, and Digital Finance Group, which has an exposure of $37 million.

On January 19, Genesis Capital, which includes Genesis Global Holdings and its lending business subsidiaries Genesis Global Capital and Genesis Asia Pacific, filed for bankruptcy, alleging potential liabilities of up to $10 billion.

Two months after discovering liquidity concerns as a result of the failure of the cryptocurrency exchange FTX, the firms filed protection under Chapter 11 of the Bankruptcy Code. Since November 16, 2022, the Genesis Global Capital platform has not allowed for any withdrawals to be processed.

On January 24, a group of creditors filed a securities class-action complaint against the Digital Currency Group, the parent company of Genesis, as well as its creator and CEO, Barry Silbert. The lawsuit alleges that the defendants violated federal securities laws.

In the case, it is alleged that Genesis engaged in securities fraud by concocting a plan to defraud prospective and current lenders of digital assets by making assertions that were false and deceptive. Plaintiffs believe that Genesis knowingly misrepresented its financial status, which they claim constitutes a violation of Section 10 of the United States Securities Exchange Act (b).


Tagged : / / / / /

DCG’s subsidiary Genesis Capital slapped with new class

A new class action lawsuit has been filed against the cryptocurrency corporation Digital Currency Group (DCG), making the company’s legal woes even more numerous. The claim was filed against DCG’s subsidiary Genesis Capital.

In a securities class action (SCA) lawsuit against DCG and its founder and CEO Barry Silbert, creditors of Genesis allege that the defendants violated laws governing the sale and purchase of securities in the United States.

On behalf of people and companies who engaged into digital asset loan arrangements with Genesis, the legal firm Silver Golub & Teitell (SGT) of Connecticut filed the action. The plaintiffs in the case are seeking compensation for their losses.

The legal company is well-known in the sector for managing important litigation, such as the class action complaint that was brought against Coinbase in March 2022.

In the new complaint filed against DCG and Silbert, it is alleged that Genesis engaged in an unregistered securities offering in violation of securities laws. Specifically, it is alleged that Genesis violated securities laws by executing lending agreements involving securities without first meeting the requirements for an exemption from registration under federal securities laws.

The complaint also claims that Genesis engaged in securities fraud by devising a plan to deceive new and current digital asset lenders by providing false and misleading representations. This is said to have occurred as part of a strategy to steal money.

Plaintiffs allege that Genesis knowingly misrepresented the company’s current financial situation, which constitutes a violation of section 10(b) of the Securities Exchange Act of the United States. ” The scheme to defraud was carried out, according to the complaint, in order to induce prospective digital asset lenders to loan digital assets to Genesis Global Capital and to prevent existing lenders from redeeming their digital assets,” SGT lawyers noted. ” The goal of the scheme was to induce prospective digital asset lenders to loan digital assets to Genesis Global Capital.”

DCG is a cryptocurrency company based in Connecticut that was established in 2015. It functions as the parent company of several digital asset and blockchain-focused subsidiaries, some of which include Genesis, a digital asset manager called Grayscale Investments, a cryptocurrency mining company called Foundry, and a cryptocurrency media outlet called Coindesk.

Silbert, the current CEO of DCG, has a controlling ownership share in the company equal to forty percent and also serves as the chairman of the board of directors for DCG.

The announcement was made as Genesis was in the midst of its first bankruptcy proceedings on January 23, after the company’s first bankruptcy filing on January 19.

The bankruptcy petition was filed a few months after Genesis temporarily ceased withdrawals on November 16 due to the fact that the company had been unable to execute redemption requests in light of the bear market in cryptocurrencies.

It has been revealed that Genesis owes $900 million to the customers of the cryptocurrency trading platform Gemini, which was established by the Winklevoss brothers. Gemini is one of the most significant debtors of Genesis.

Cameron Winklevoss, one of the co-founders of Gemini, went to Twitter on January 20 to announce that the company was ready to take direct legal action against DCG, Silbert, and “those who share culpability for the scam.”


Tagged : / / / / / /

Bybit CEO clarifies company’s exposure to Genesis

On January 20, 2019, renowned cryptocurrency lender Genesis Global Trading became the latest firm to declare bankruptcy in the aftermath of the collapse of FTX. Genesis Global Trading filed for protection under Chapter 11 in New York, becoming the fourth company to do so.

On the other hand, the attention of the cryptocurrency community has recently switched onto other companies that were exposed to the loan company.

According to one source, a total of nine different cryptocurrency companies, including Gemini, Bybit, VanEck, Decentraland, and others, have exposure to the Genesis blockchain.

Ben Zhou, the CEO of Bybit, was quick to reply to the claims and emphasised that his company did indeed have a $150 million exposure to the defunct cryptocurrency lender through its investment arm Mirana.

Zhou made the observation that Mirana only handled a part of Bybit’s assets, and that the estimated $151 million exposure included around $120 million of collateralized holdings, all of which Mirana had previously liquidated.

Additionally, he ensured that customer cash are kept separate and that the various products offered by Bybit do not utilise Mirana.

Although many people were grateful for the swift answer provided by the co-founder, many others still had further concerns about the clarification, particularly concerning the various items offered by the firm.

One of the users sought complete transparency about the earn items and the yield generation process.

Another user raised concerns over their connection with Mirana and inquired as to whether or not they follow a strategy comparable to that of FTX/Alameda.

Others were perplexed by the timing of the revelation, considering the many problems that have been associated with the book of Genesis.

Some of Genesis’s largest lenders, such as Gemini, have been quite vocal in their demands for action to be taken against the Digital Currency Group, which is Genesis’s parent business.

A user commented as follows: “If you tweet “full transparency” only after you have been discovered with your trousers down, then your claim is immediately invalidated.

ByBit would have disclosed this information some months ago if it were considered “full transparency.”

“Many other people wanted evidence that transactions had taken place between Bybit and Marina as a kind of reassurance while also reminding Zhou that previous FTX executives had made comments that were quite similar.

I appreciate the promptness with which you have responded to this.

Please be aware that despite this, everyone is still on edge.

People will have a more positive reaction and feel better about themselves if you can present more proof or evidence. The CryptoData Twitter Account (@TheCryptoData) January 20, 2023


Tagged : / / / / / /

Genesis Files for Chapter 11 Bankruptcy

Genesis, a cryptocurrency lending company, has filed a petition for bankruptcy protection under Chapter 11 in the Southern District of New York.

According to the filing from January 19th, the company is projected to have liabilities in the range of $1 billion to $10 billion, and its assets fall within the same range.

According to earlier reports, the firm was reportedly contemplating applying for bankruptcy protection in the event that it was unable to obtain sufficient money to address the liquidity issue it was facing.

Genesis said in a news statement dated January 19 that it has been in conversations with its advisers “to its creditors and corporate parent Digital Currency Group (DCG) to analyse the most effective approach to preserve assets and take the company forward to determine the best way to proceed.” ” Genesis has already begun the process of reorganisation, which will be overseen by the court, in order to further forward these conversations.

According to the Chapter 11 plan that the firm has developed, it is now considering a “dual track procedure” that would include seeking a “sale, capital raising, and/or an equitization transaction.” This would ostensibly make it possible for the company “to emerge under new ownership.”

According to the company, Genesis’s activities in the areas of derivatives, spot trading, broker-dealer services, and custody will not be affected by the Chapter 11 proceedings and will continue to function normally.

In addition to this, it said that it has a cash reserve of more than $150 million, which it thinks “would provide adequate liquidity to fund its continued business activities and simplify the process of restructuring.”

Genesis has stated that the goal of the restructuring process is to provide “an optimal outcome for Genesis clients and Gemini Earn users.” The process will be led by a “independent special committee” of the board of directors of the company, and this committee will be responsible for overseeing the entire restructuring process.

In November 2022, in response to the disruption in the market created by the failure of FTX, the company temporarily halted all withdrawals from its platform.

Customers of the yield-bearing product Gemini Earn, which is available to users of the cryptocurrency exchange controlled by Genesis, were disrupted as a result of the shift.

Cameron Winklevoss, the co-founder of Gemini, tweeted that the bankruptcy is a “crucial step” toward Gemini users being able to recover their assets. However, Cameron Winklevoss claimed that DCG and its CEO Barry Silbert “continue to refuse to offer creditors a fair deal.” Cameron Winklevoss threatened to file a lawsuit “unless Barry and DCG come to their senses.”

6 If Barry and DCG don’t come to their senses and make a reasonable offer to the creditors, we are going to have no choice but to file a lawsuit against them as soon as possible.

— Cameron Winklevoss, also known as @cameron on Twitter The 20th of January, 2023 Both Genesis and Gemini are being investigated by the Securities and Exchange Commission (SEC) of the United States for allegedly selling unregistered securities via the Earn programme. The SEC is investigating both companies.

Concerns are growing inside DCG, the parent company of Genesis, since it is possible that the business may have to liquidate a portion of its venture capital portfolio worth $500 million in order to make up for Genesis’ obligations.

In an effort to “reduce operational expenditures and preserve cash,” DCG ceased paying dividends on January 17, 2019.

Reportedly being considered is the sale of DCG’s cryptocurrency media site CoinDesk, which could bring in an additional $200 million for the company.


Tagged : / / /

Coindesk May Be Sold as Parent Company DCG Struggles

According to recent reports, the cryptocurrency news website CoinDesk is mulling over the possibility of being sold as its parent company, Digital Currency Group (DCG), wants to improve its financial standing.

The Wall Street Journal reports that CoinDesk has enlisted the assistance of investment bankers from the financial advising firm Lazard. These investment bankers are assisting the company in weighing its alternatives, which may include a whole or partial sale.

You know, I recently became aware that Coindesk is now available for purchase.

Charles Hoskinson, who tweets under the handle @IOHK Charles 19th of January, 2023 In the past few months, it has been reported that DCG has received multiple offers for the media company that are higher than $200 million. If these reports are accurate, this would represent an incredible return on investment for DCG given that the company was reportedly purchased by DCG for only $500,000 in 2016.

It would seem that Barry Silbert’s DCG is experiencing significant financial difficulties as of late. On January 17, the company informed its shareholders that it will be suspending dividend payments in an attempt to improve the soundness of its balance sheet and “preserve liquidity.”

On January 18, Bloomberg reported that another DCG subsidiary, crypto lending business Genesis Global, was intending to file for bankruptcy after it revealed that it owed creditors over $3 billion. This is undoubtedly the primary cause contributing to DCG’s current financial predicament.

According to the company’s website, DCG’s venture capital portfolio includes about 200 crypto-related startups, some of which include CoinDesk and Genesis.

The asset management company Grayscale Investments, the cryptocurrency exchange Luno, and the advising firm Foundry are all other businesses that are owned by DCG.

Some people believe that the article published by CoinDesk in November that revealed the irregularities in Alameda Research’s balance sheet was the first domino that eventually led to the collapse of the cryptocurrency exchange FTX as well as the liquidity issues that Genesis, its parent company DCG, and the broader cryptocurrency market are currently facing.


Tagged : / / / / / / / / / / / /

Three Top JPMorgan Executives Jump Ship to Crypto Startups

According to Fortune media, three top executives at JPMorgan have left the leading major bank to join the cryptocurrency industry. 

Despite the current crypto winter, this week has seen three executives working at the giant bank depart and joined crypto firms.

Eric Wragge, a former managing director at JPMorgan with 21 years working at the bank, has joined the Algorand blockchain technology firm as Head of Business Development and Capital Markets.

Puja Samuel, a former Head of Ideation and Digitization at JPMorgan, has also joined Digital Currency Group (a parent company that owns Bitcoin brokerage firm, Genesis Trading and CoinDesk crypto media) as Head of Corporate Development.

Also, early this week, Samir Shah, JPMorgan Chase’s Head of Asset Management Sales, left the bank and assumed the role of Chief Operating Officer at cryptocurrency-focused investment firm Pantera Capital.

Wragge’s joining Algorand shows that he will report to Algorand Foundation CEO Staci Warden. In the new role, he will be expected to chair the foundation’s investment committee as well as lead initiatives in both traditional capital markets as well as decentralized finance (DeFi).

Wragge talked about his appointment at Algorand and said: “Coming from a leading global investment bank, I understand the uncompromising performance requirements for a layer 1 blockchain to compete against and improve upon many aspects of traditional finance.”

Samuel, also commented about his role at Digital Currency Group: “I am excited to help build out new strategic partnerships alongside an energized team that is driving change across the financial system.”

Embracing Crypto World

The latest move of JPMorgan executives jumping ship to the crypto industry is a trend that has been developing lately. Several executives have moved from big corporations to crypto startups.

In February, Goldman Sachs executive Roger Bartlett left the leading global investment bank after 16 years and joined the Coinbase crypto exchange. In his LinkedIn profile, Bartlett stated that it was time to embrace the cryptocurrency economy. He described the change as a once-in-a-lifetime opportunity to become part of building the next stage of the digital revolution.

That is the same sentiment held by several big tech executives and finance professionals making the move into cryptocurrency, as they look to be part of the rapidly growing crypto industry.

Some Wall Street executives have left to launch their own crypto or Web3 ventures. In 2018, Amber Baldet, a prominent blockchain executive at JPMorgan Chase, left the bank and co-founded decentralization startup Clovyr.

In March, Revolut’s chief revenue officer Alan Chang departed the British fintech to start a new crypto venture.

In April last year, Konstantin Shulga, a former senior executive of Russia’s largest bank, Sber, co-founded Finery Markets, a crypto-over-the-counter service, where he serves as the CEO.

The rise in executive moves is an indication of the growing attraction to the crypto world for financial and tech executives who are believed to have amassed a fortune but are keen to become part of the next disruption.

Image source: Shutterstock


Tagged : / / / / / /
Bitcoin (BTC) $ 27,229.30 0.21%
Ethereum (ETH) $ 1,905.03 0.08%
Litecoin (LTC) $ 96.25 0.52%
Bitcoin Cash (BCH) $ 116.54 1.40%