Genesis lays off 30% of staff! Evaluating bankruptcy reorganization; DCG announces closure of wealth management subsidiary HQ by end of the month

Lending platform Genesis suffered significant bad debt losses due to the 3AC incident in August last year, leading to a layoff of nearly 20% of its employees. Now, affected by the bankruptcy of FTX, another round of layoffs is underway. After discussions with investment banks, the possibility of filing for Chapter 11 bankruptcy protection is not ruled out. Furthermore, bad news has also emerged regarding Genesis' parent company, with plans to close its subsidiary HQ this month.

Genesis Announces Layoffs, Does Not Rule Out Bankruptcy Reorganization

According to a report by CoinDesk here, Genesis laid off approximately 30% of its staff yesterday, with many from the sales and business development departments, reducing its workforce to only 145 employees.

"As we continue to navigate unprecedented industry challenges, Genesis has made the difficult decision to implement a global reduction in force," a Genesis spokesperson said.

Genesis wrote to its clients yesterday, stating, "With some additional time, I believe we can find a solution. This includes reducing costs and increasing efficiencies." Today's news of significant layoffs is part of the cost-cutting measures.

In addition to the layoff news, a report by The Wall Street Journal here mentioned that Moelis & Co., an investment bank that has been assisting Genesis in strengthening its finances and planning for its future since last year, is currently evaluating Genesis's future options, including potentially filing for bankruptcy reorganization under Chapter 11 of the U.S. Bankruptcy Code.

However, as previously reported, Genesis's parent company DCG owes a 10-year promissory note valued at $2.1 billion. If Genesis were to file for bankruptcy liquidation, this note would immediately become due, and DCG would have to pay this substantial amount in cash, potentially pushing DCG to the brink of bankruptcy as well.

DCG Announces Closure of Subsidiary HQ

Following Genesis's layoff announcement, DCG also announced yesterday that it will be closing its wealth management subsidiary, HQ, by the end of this month, which previously managed over $3.5 billion in assets.

"Due to broader economic conditions and prolonged crypto winter presenting significant challenges for the industry, we have decided to wind down HQ starting January 31st," HQ stated.