Genesis is making a lot of noise thanks to the hopes created by its restructuring. Nevertheless, the image would be darker than advertised.
Genesis creditors more than expected
As the crypto sector continues to suffer setbacks from the crisis generated by the fall of FTX, what about trading company Genesis? Nearly two weeks after the fateful date of what was to become its bankruptcy, the company’s management team remains as tight-lipped as ever. The initial doubts will nevertheless have been swept away by the apparent refusal to give up and then by the announcement of a restructuring attempt.
But several days after raising the hopes of its customers, Genesis now paints a much gloomier picture. In fact, the crypto trading business would continue to be overwhelmed by debt, with very large amounts still to be repaid. According to The Financial Times, no less than $900 million is to be paid to Gemini, while negotiations are already underway to enable quick recovery of the jackpot. The true nature of the links between Genesis and the exchange platform founded by the Winklevoss twins is not yet known, although the latter is in the midst of maneuvering to allow compensation for its customers.
Additionally, as Genesis creditors have banded together to avoid bankruptcy while recovering their funds, new individuals are expected to band together in the coming weeks and join the movement. It also appears that the money that should be returned to them is greater than expected. So far, the real amount of compensation that the company in crisis must pay is therefore not yet final and could increase over time. However, the sum of their repayments is estimated at a minimum of $1.8 billion after a new group of creditors reported losses of another $900 million.
Heading for a new domino effect?
Despite the apparent discretion of the Genesis management team, which did not come to deny or confirm this new assessment of its debt, the atmosphere is pessimistic within the cryptosphere. In fact, the trading company had stated that it needed a billion dollars to get out of it before revising its request downwards. The sum of the repayments to be paid finally seems to exceed anything previously imagined, and for two numerous individuals, the chances of a bankruptcy for Genesis are now at their highest.
In addition, a new phenomenon of domino effect is also expected, as according to some netizens, the parent company of Genesis may have to sell all its companies in order to repay its creditors. A situation that promises to become difficult in light of all the loans that have been entered into internally in the network of companies in the Digital Currency Group, and which already testify to the great difficulties that were present even before the start of the crisis.
Finally, the bankruptcy of Genesis and the hypothesis of the resale of its sister companies do not bode well for the crypto sector. Besides ushering in the downfall of the empire created by the Digital Currency Group, they could then put all the other companies that have traded with it in trouble.
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