Luno Sister Company, Genesis, Files for Bankruptcy With Aggregate Liabilities of Up to $11 Billion

Crypto lender, Genesis, has filed for bankruptcy in January 2023, becoming the latest casualty from the fall of FTX in November 2022.

DCG Statement on Genesis Capital Chapter 11 Bankruptcy Filing: https://t.co/6SsWj4zo3Rpic.twitter.com/j9e8R3mMZv

— Digital Currency Group (@DCGco) January 20, 2023

In its bankruptcy documentation, the company held by Digital Currency Group (DCG) has registered more than 100,000 creditors in a "mega" bankruptcy with total liabilities ranging from $1.2 billion to $11 billion.

The sister corporation Genesis, Luno, is not in trouble immediately after the events, according to its director.

Dcg's subsidiaries, such as Genesis, have always functioned as independent companies with their own management teams, financial and risk management protocols, and legal and compliance supervision. Luno is a wholly owned, independent operating subsidiary of DCG.” – Luno SA country Manager, Christo de Wi

Luno’s Savings Wallet product worked in partnership with Genesis as a lending partner for the product. Savings Wallet lets customers deposit cryptocurrencies and earn interest from Genesis loans but customers have to opt in to the service

The Luno swap (crypto buy and sell) uses a standard portfolio and not the savings portfolio. The fact remains that luno secured the savings portfolio so that when Genesis stopped the redemptions in November 2022 after the collapse of ftx, the South African company was able to return all the clients' funds.

This is the opposite of us crypto exchange, gemini, which has a similar product, the gemini win product, allowing clients to deposit their crypto for investment by genesis. When Genesis stopped the buybacks, Gemini clients could not withdraw their balances, with up to $900 million in Gemini client funds now in question.

Chapter 11 allows a company to continue to operate at the same time as trying to find ways to repay its creditors. Genesis anticipates using the chapter 11 process to try to sell assets or raise funds, the creditors eventually become owners of the reorganized enterprise in the event of failure of these efforts, He said in a declaration.

With client funds at issue and gemini threatening legal action, There is the greatest threat to genesis and single parent society, dcg, the obligation to declare bankruptcy, which may affect all of its assets.

“These scenarios are highly speculative and we prefer not to speculate at this stage,” De Wit said. However, as a major participant in the cryptography market, Luno constantly monitors any event that could affect its operations or the market in general.”

"Given Luno's ownership structure and independence, the company is poised for uncertainty."

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