Genesis, a cryptocurrency lending company, has filed for Chapter 11 bankruptcy protection in the Southern District of New York.

According to the January 19 filing, the company is projected to have liabilities in the range of $1 billion to $10 billion, and its assets are within the same range.

According to previous reports, the company would be considering filing for bankruptcy protection if it could not raise enough money to address the liquidity problem it was facing.

Genesis said in a press release dated January 19 that it has been in discussions with advisers “to its creditors and corporate parent Digital Currency Group (DCG) to discuss the most effective approach to preserve assets and move the company forward. to determine the best way. to proceed.” Genesis has already begun the reorganization process, which will be court-supervised, to move forward with these talks.

Under the Chapter 11 plan the company has developed, it is now considering a “two-track procedure” that would include seeking a “sale, capital increase, and/or acquisition transaction.” Apparently, this would make it possible for the company to “arise under new ownership.”

According to the company, Genesis’ activities in the areas of derivatives, spot trading, brokerage and custody services will not be affected by the Chapter 11 proceedings and will continue to operate as normal.

In addition to this, it said it has a cash reserve of more than $150 million, which it believes would “provide adequate liquidity to fund its ongoing business activities and simplify the restructuring process.”

Genesis has stated that the goal of the restructuring process is to provide “an optimal outcome for Genesis clients and Gemini Earn users.” The process will be led by an “independent special committee” of the company’s board, and this committee will be responsible for overseeing the entire restructuring process.

In November 2022, in response to the market disruption created by FTX’s bankruptcy, the company temporarily halted all withdrawals from its platform.

Clients of the Gemini Earn yield product, which is available to users of the Genesis-controlled cryptocurrency exchange, were disrupted as a result of the change.

Cameron Winklevoss, co-founder of Gemini, tweeted that bankruptcy is a “crucial step” for Gemini users to recover their assets. However, Cameron Winklevoss claimed that DCG and its CEO, Barry Silbert, “continue to refuse to give creditors a fair deal.” Cameron Winklevoss threatened to sue “unless Barry and DCG come to their senses.”

6 If Barry and DCG do not come to their senses and make a reasonable offer to creditors, we will have no choice but to file a lawsuit against them as soon as possible.

— Cameron Winklevoss aka @cameron on Twitter January 20, 2023 Both Genesis and Gemini are under investigation by the United States Securities and Exchange Commission (SEC) for allegedly selling unregistered securities through the Earn program. The SEC is investigating both companies.

Concerns are growing within DCG, Genesis’s parent company, that the company may have to liquidate a $500 million portion of its venture capital portfolio to offset Genesis’ liabilities.

In an effort to “reduce operating expenses and preserve cash”, DCG stopped paying dividends on January 17, 2019.

The sale of DCG’s cryptocurrency media site CoinDesk is reportedly being considered, which could generate an additional $200 million for the company.