The cryptocurrency market is preparing to witness the downfall of yet another notable name. Cryptocurrency lending platform Genesis is preparing to move forward this week with a file for creditor protection under Chapter 11 of the US Bankruptcy Code, according to sources familiar with the matter, quoted by Bloomberg.
The loan-focused company, which is owned by the cryptocurrency group, has been in secret talks with several lenders due to the liquidity crunch.
Digital Currency Group has been under pressure since the failure of the Three Arrows Capital hedge fund. The situation was exacerbated by the “collapse” of FTX, in which Genesis owned some assets. In fact, in November, after FTX filed for creditor protection, Genesis froze asset withdrawals to ensure liquidity.
Despite being outside the list of the world’s 50 largest crypto exchanges, Genesis has gained notoriety for its partnership with Gemini, the world’s 10th largest cryptocurrency exchange.
Gemini has entered into an agreement with Genesis to be able to provide its customers with the “Gemini Earn” crypto loan function.
In January, Gemini issued an open letter alleging that Genesis and its parent company, Digital Currency Group (DCG), defrauded Gemini and more than 340,000 Gemini Earn users.
Creditor Protection: From “No” to “Yes”
Despite the difficulties, Genesis at the end of last year rejected the idea of filing for creditor protection.
At that time, it was The Wall Street Journal reported that Genesis approached Binance to raise capital for its lending unit, but the platform led by Changpeng Zhao Declined for fear of conflict of interest.
According to the same news, Genesis will also try with Apollo Global Management to help on a capital level.