Genesis Bankruptcy Will Be Quick and Efficient, Says Interim CEO

The interim CEO of Genesis Global Holdco LLC, Derar Islim, assured creditors like Gemini that the bankruptcy of the company will take place "quickly and efficiently."

Write investors shortly after the bankruptcy of Genesis under Chapter 11 in the United States, Islim said in one of the Bloc's letters, Our goal is to complete the chapter 11 process as quickly and efficiently as possible, while at the same time achieving the best results and positioning ourselves well for the future." Islim assumed leadership of the lending firm in August 2022 after the resignation of former CEO Michael Moro.

Genesis owes $3.6 billion to its 50 most important creditors.

Genesis declared bankruptcy under Chapter 11 on January 20, 2023, after suffering a massive liquidity crunch after the Three Arrows Capital hedge fund failed to repay a $2.4 billion loan. He paused payments and loan applications on November 16, 2022. 

The , says the company has over 100,000 creditors. He would have a debt of approximately $3.6 billion to his 50 principal unsecured creditors. 

Genesis owes Gemini Earn customers an estimated $900 million, Amsterdam-based exchange Bitvavo about $303 million, Moonalpha Financial Services $150 million, and Plutus Lending $30 million. Other applicants include the new financial revenue fund from vaneck and the cumberland crypto trading company. While the Genesis Depots pinned Cumberland's claim to approximately $18 million, the crypto-trader claims that Genesis owes him approximately $46,000.

Prior to declaring bankruptcy, Genesis transferred approximately $150 million to a number of central exchanges, including , Kraken, and Coinbase, which allow themselves to operate in the event of bankruptcy.

Who can blame Gemini for winning fiasco?

Gemini co-founder Cameron Winklevoss has threatened legal action against the Genesis owner Digital Currency Group (DCG) and its CEO Barry Silbert if Gemini customers do not get fair treatment from the bankruptcy proceedings. 

hit back, calling his threat “another publicity stunt from Cameron Winklevoss to deflect blame from himself and Gemini.”

Genesis reportedly  over 340,000 Gemini Earn customers about $900 million. Win clients have donated their assets to Genesis to generate returns. As agent, gemini has taken up a 4.29% reduction in yields.

According to s, gemini confirmed following a second trial that clients were aware of the risk of "total loss.”

However, the one Earn customer’s experience with Gemini’s customer service referred to FDIC insurance, allaying any illiquidity fears.

“All fiat currency held by Gemini to redeem your GUSD is held by our partner financial institutions in a secure account and is eligible for FDIC insurance,” Gemini’s customer service told Peter Chen, that has invested approximately $18,000 into the account. GUSD is Gemini’s stablecoin, while FDIC insurance refers to Federal Deposit Insurance. FDIC insurance is a safety net that provides depositors with protection from a banking scenario. 

While its registration with the Department of Financial Services of the State of New York obliges it to maintain some capital requirement, gemini is not regulated as a bank. As a result, clients were at risk of illiquidity when they deposited their money. 

Small investors such as Chen could be waiting a long time for their money. The $1.1 billion promissory note maturing in 2032 Silbert promised to help Genesis’s liquidity is not callable. Nor is an additional $526 million that DCG must pay to Genesis by May 2023 guaranteed to restore Gemini clients in the near future.