The cryptocurrency lending industry is facing yet another setback as Genesis Global Capital plans to file for bankruptcy in the coming days.
According to Bloomberg News, sources familiar with the situation have confirmed that the company, which froze customer redemptions in November following the downfall of major cryptocurrency exchange FTX, is expected to file for bankruptcy protection.
The collapse of FTX in November has had a domino effect on the crypto lending industry, with several companies, such as BlockFi and Core Scientific Inc, filing for bankruptcy in the following months.
Genesis, its parent company Digital Currency Group, and creditors have been in talks for weeks, but so far, have failed to reach an agreement. Leading law firms Kirkland & Ellis and Proskauer Rose have been advising groups of creditors in this process.
In addition to the bankruptcy proceedings, Genesis is also embroiled in a dispute with Gemini, a crypto exchange founded by the Winklevoss twins. Gemini has accused Genesis of owing it $900 million in connection with a crypto lending product called Earn, which the two companies offered in partnership.
To add to the company's troubles, the US Securities and Exchange Commission (SEC) recently charged Genesis and Gemini with illegally selling securities to hundreds of thousands of investors through their crypto lending program.
The bankruptcy filing of Genesis Global Capital is yet another blow to the crypto lending industry, which has been hit hard by the recent market downturn and regulatory scrutiny. It remains to be seen how this will impact the future of crypto lending and the companies that operate in this space.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.