A lawyer for bankrupt crypto lending firm Genesis is optimistic the firm can resolve its creditor disputes as early as this week and the company could come out of Chapter 11 proceedings by late May.
Genesis’ lawyer Sean O'Neal made the comments at a Jan. 23 initial hearing at the United States Bankruptcy Court for the Southern District of New York, according to a Reuters report.
He added Genesis had "some measure of confidence" it would resolve disputes with creditors by the end of the week and, if needed, would look for the judge to install a mediator, but said:
"Sitting here right now, I don't think we're going to need a mediator. I'm very much an optimist."Genesis filed for Chapter 11 bankruptcy on Jan. 19. At the time it already had a restructuring plan along with a path pursuing a “sale, capital raise, and/or an equitization transaction" so it could potentially “emerge under new ownership.”
The bankruptcy comes nearly two months after Genesis suspended withdrawals in November 2022 citing market turbulence caused by the bankruptcy of crypto exchange FTX.
A series of "first-day" motions, standard in bankruptcy proceedings, were granted by Judge Sean Lane to Genesis which included allowing the firm to pay employees and vendors.
Lane added Genesis did not need to reveal customer names on its creditor's list, citing privacy concerns. Lane even suggested the lender warn users about possible phishing scams if the names are later made public.
Genesis said it will sell its assets at auction with a plan to exit its bankruptcy in a little under four months on May 19.
Related: BlockFi exec argues bankruptcy court should approve bonuses to retain talent
It reported having just over $5 billion in assets and liabilities and owes over 100,000 creditors at least $3.4 billion. Genesis’ withdrawal suspension last year impacted users of a yield-bearing product it managed called “Earn” from the Gemini exchange.
Gemini is Genesis’ largest creditor and is owed nearly $766 million.
Its largest debtor was its parent company, Digital Currency Group (DCG), which owes Genesis around $1.65 billion inclusive of $575 million of loans due in May and a $1.1 promissory note maturing in 10 years' time.
Even though DCG is facing its own financial troubles — the bankruptcy did not include DCG. Similarly, the Genesis entities handling derivatives, spot trading, broker-dealer and custody are not part of the proceedings and are continuing operations according to Genesis.
