Bankrupt crypto lender Genesis optimistic it can resolve creditor disputes
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Genesis’ problems have put Digital Currency Group CEO Barry Silbert into conflict with crypto exchange Gemini, which is its largest creditor.
PHOTO: REUTERS
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NEW YORK – A lawyer for Genesis Global Capital said on Monday that the bankrupt cryptocurrency lender had some confidence that it could resolve its disputes with creditors this week, with a goal of emerging from Chapter 11 by late May.
Mr Sean O’Neal, the lawyer, spoke at an initial hearing in Manhattan bankruptcy court for Genesis Global Capital, the crypto lending business owned by Mr Barry Silbert’s venture capital firm Digital Currency Group (DCG).
Genesis and two lending units filed for bankruptcy protection collapse of Sam Bankman-Fried’s FTX exchange.
Mr O’Neal said Genesis had “some measure of confidence” it would resolve its disputes with creditors this week, following about two months of negotiations, and would seek mediation if necessary. “Sitting here right now, I don’t think we are going to need a mediator... I am very much an optimist.”
Mr Brian Rosen, a lawyer for creditors holding US$1.5 billion (S$2 billion) of claims, said that they were “getting closer” to an accord.
US bankruptcy judge Sean Lane granted a series of “first-day” motions by Genesis, including to pay employees and critical vendors, which are common in bankruptcy cases.
Citing customers’ privacy interests, the judge also said Genesis did not have to reveal customer names in its lists of creditors, and suggested that it warn about possible phishing scams if their names were made public later.
Genesis has said it plans to sell various assets at auction, and exit bankruptcy by May 19.
The company reported just over US$5 billion of assets and liabilities, and has said it owed more than 100,000 creditors at least US$3.4 billion. It estimated it has nearly US$1.7 billion of claims against its parent.
Genesis’ bankruptcy does not include DCG, or Genesis’ derivatives and spot trading, custody and brokerage businesses. DCG also controls asset manager Grayscale and news service CoinDesk.
Genesis’ problems have put Mr Silbert into conflict with cryptocurrency pioneers Cameron and Tyler Winklevoss,
On Jan 12, the United States Securities and Exchange Commission charged Genesis and Gemini with illegally selling unregistered securities through their Gemini Earn lending product.
The Winklevosses have said Genesis should repay the US$900 million of assets owed to about 340,000 Earn investors, and Mr Cameron Winklevoss has called for Mr Silbert’s removal.
Mr Chris Marcus, a lawyer for Gemini and some other creditors, told Judge Lane that “there is some work to do” to get everyone on the same page, but that he was “cautiously optimistic” the disputes could be resolved without a mediator.
Genesis’ borrowers also include hedge fund Three Arrows Capital and Alameda Research, a trading firm affiliated with FTX, a person familiar with the matter said last week.
Three Arrows and Alameda are also in bankruptcy proceedings. REUTERS
