Genesis creditors have banded together to coordinate expert legal representation, in the hopes of arriving at an amicable resolution with the digital asset company. Genesis is under fire after cutting off customer access to their deposits this month, following FTX’s bankruptcy.
An assembled group of creditors already has more than $700 million represented, making up a significant proportion of Genesis’ outstanding funds.
They will be legally represented by Proskauer partner Brian Rosen, a veteran when it comes to representing debtors and creditors in distressed situations. Most notably, Rosen has been part of restructurings for Enron, Washington Mutual, Foxwoods, the United Companies Financial Corporation, and several other high-profile entities.
The group is still seeking to establish contact with additional creditors affected by the recent events.
What happened to Genesis?
Genesis Global Capital, the lending arm of Genesis Trading, halted customer withdrawals on November 16, stating that “abnormal withdrawal requests” had exceeded their current liquidity – those abnormal requests being triggered by the FTX collapse.
It later became apparent that the firm not only did not have enough liquidity on-hand to fulfill the requests but no longer had access to enough assets at all to honor customer redemptions.
Genesis publicly began seeking up to $1 billion in emergency funding, warning that it may declare bankruptcy if it could not secure the additional funds. No investors appear to have expressed credible interest to date.
Genesis Trading is a subsidiary of Digital Currency Group, a venture capital company that also owns crypto news outlet Coindesk and digital asset management firm, Grayscale. Grayscale is well-known for its GBTC bitcoin trust – an investment vehicle providing Bitcoin exposure to institutional investors.