- Genesis faces charges from SEC and is forced to register for bankruptcy protection
- The crypto lending firm reported a $2.36 billion loss to borrower Three Arrows Capital in July 2022
- Genesis users struggle to withdraw their funds due to suspended services by the platform.
Crypto lender Genesis is planning to file for Chapter 11 bankruptcy following SEC charges for selling unregistered securities, Bloomberg reports. The platform is in
“confidential negotiations with various creditor groups amid liquidity crunch.”
Yet another insolvent crypto firm prepares to appear in front of the US court. Genesis was barely holding on well after 3AC went insolvent.
Later, when FTX went down, the lender completely collapsed on November 16. It immediately suspended its withdrawals and deposits for users.
This month, Genesis along with crypto wallet service Gemini was investigated by Gary Gensler from the U.S. Securities and Exchange Commission. According to insiders, these charges were related to both firms illegally selling unregistered securities through their lending programs to investors.
On the other hand, Genesis is also in conflict with Gemini as it owes its customers $900M, claimed by the team publicly. Furthermore, its parent company also suspended dividends to recover its balance sheets and liquidity, according to a CoinDesk report.
Users wait in dismay
Both companies have been in conflict for months while their users wait anxiously to get their funds back. So far, neither Gemini nor Genesis has paid back the customers.
With SEC charges and bankruptcy filing, the users await decisions from the regulators, preferably in favor of them.