A lawyer for bankrupt crypto-lending company Genesis is optimistic that the firm will be able to resolve its disputes with creditors as early as this week, and the company could exit Chapter 11 proceedings by the end of May.
According to a Reuters report, Genesis attorney Sean O’Neill made the comments at an initial hearing Jan. 23 in the United States Bankruptcy Court for the Southern District of New York.
He added that Genesis has “some degree of confidence” that they will resolve disputes with creditors by the end of the week and, if necessary, seek a judge to appoint a mediator, but said:
“Sitting here right now, I don’t think we’re going to need an intermediary. I am very optimistic.”
Genesis filed for Chapter 11 bankruptcy on January 19. She already had a restructuring plan at the time, as well as a path involving “a sale, a capital raise and/or a balancing deal”, so she could potentially “appear under new ownership”.
The bankruptcy comes almost two months after Genesis suspended withdrawals in November 2022, citing market turbulence caused by the bankruptcy of crypto exchange FTX.
Judge Sean Lane filed a series of “day one” motions, standard in bankruptcy proceedings, with Genesis, which included allowing the firm to pay employees and suppliers.
Lane added that Genesis does not need to disclose the names of clients on the list of creditors, citing privacy concerns. Lane even suggested that the lender warn users of possible phishing if the names were later made public.
Genesis said it would sell its assets at auction, planning to emerge from bankruptcy in just under four months on May 19.
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He revealed that he has just over $5 billion in assets and liabilities and owes at least $3.4 billion to more than 100,000 creditors. The suspension of Genesis withdrawals last year affected users of a profitable product called Earn Money on the Gemini exchange.
Gemini is Genesis’ largest creditor and is owed nearly $766 million.
Its largest debtor was parent company Digital Currency Group (DCG), which owes Genesis about $1.65 billion, including $575 million in loans maturing in May and a $1.1 note maturing in 10 years.
Despite DCG facing its own financial problems, the bankruptcy did not affect DCG. Similarly, the Genesis derivatives, spot trading, broker-dealer and custody companies are not involved in the proceedings and continue to operate, according to Genesis.