DCG Crisis! Genesis Affiliate Company Files for Bankruptcy Protection, Will DCG Bonds Be Redeemed?

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Genesis Officially Files for Bankruptcy

Genesis Global Holdco, LLC, the parent company of Genesis Global Capital, a lending platform under DCG, has filed for Chapter 11 bankruptcy protection in the United States on Thursday night, as reported by Business Wire. According to the documents, Genesis Global Holdco, LLC has assets ranging from $100 million to $500 million, liabilities ranging from $100 million to $500 million, with 1 to 49 creditors. Its subsidiaries Genesis Global Capital, LLC and Genesis Asia Pacific Pte have also filed for bankruptcy protection, with Genesis Global Capital, LLC having assets and liabilities in the range of $1 billion to $10 billion.

Public filings state, "Genesis has proposed a plan to establish a trust to address all claims and distribute assets to creditors. The plan contemplates a dual-track process to seek a sale, financing, and/or securities transaction to allow the business to emerge under new ownership. The company will initiate a sales process to monetize GGH's assets or raise funds in another manner, using the proceeds of the transaction to fairly and equitably pay creditors. If the sales process does not result in a sale or financing, creditors will receive ownership interests in the reorganized GGH."

Did Genesis Treat DCG's Promissory Note as Cash? Multiple Sources Confirm

A dispute arose over the Earn product, a collaboration between exchange Gemini and institutional lending platform Genesis, following FTX's bankruptcy. Gemini co-founder Cameron Winklevoss accused Genesis' parent company DCG CEO Barry Silbert of fraud, stating, "Genesis treated DCG's promissory note as a Current Asset, listed under a subcategory of other assets." In detail, Gemini made multiple accusations against DCG, calling for the CEO's resignation! DCG admits debt suspicions, borrowing plus promissory note exceed $1.5 billion

Five sources confirmed to media outlet The Block that Genesis classified DCG's $1.1 billion promissory note as a current asset, affirming Gemini co-founder's statement.

The disposition of DCG's promissory note post Genesis' bankruptcy restructuring is crucial to DCG's operational health.

Possible Future Directions for DCG

Dragonfly Capital partner Haseeb Qureshi predicted the potential developments of this matter in December last year.

Haseeb Qureshi believes there are three possible outcomes:

1. Genesis files for bankruptcy, DCG also files due to inability to pay $1.1 billion, leading to a complex bankruptcy procedure for both.

2. Genesis also files for bankruptcy, but auctions the 10-year promissory note at a price below face value with the joint agreement of Genesis creditors to avoid DCG's bankruptcy, assuming investors believe DCG's bankruptcy would worsen everything.

3. Genesis undergoes corporate restructuring, reducing the claims available to creditors with the joint agreement of Genesis creditors, avoiding a bankruptcy process harmful to large creditors.

Appendix: Genesis Creditors