In a recent development, the parent firm of cryptocurrency lender Genesis Global Capital, Digital Currency Group (DCG), has disclosed that it is close to resolving the Chapter 11 bankruptcy case of Genesis Global Capital.
The developments come after DCG filed for bankruptcy on January 20 identifying more than 100,000 creditors with total debts ranging from $1.2 billion to $11 billion.
A letter to shareholders from DCG’s leadership disclosed that the company is now close to reaching an agreement in principle to settle the claims in the Genesis Capital Chapter 11 lawsuits following months of difficult talks.
This comes a month after Gemini, one of Genesis’ debtors, filed a fraud-related lawsuit against the business. The lawsuit alleged that Genesis had engaged in “a complex fraudulent scheme and artifice to practice deception” against Gemini, which the Winklevoss Twins own.
The bankruptcy situation was made worse when Genesis and its previous business partner Gemini were charged with engaging in the unauthorized sale of securities by the U.S. Securities and Exchange Commission (SEC), with the SEC’s involvement increasing concerns about the possible failure of other companies in the industry.
In response to the bankruptcy filing, DCG, Genesis Global Holdco’s parent company, declared its readiness to negotiate a sale or equity arrangement to settle debts. In support of the restructuring process, the company assured investors and other stakeholders that it had $150 million in cash.
Meanwhile, Mark Shifke, a senior executive at JPMorgan Chase (JPM.N) and Goldman Sachs, was recently appointed as the new chief financial officer of Digital Currency Group on Monday.
The cryptocurrency sector, which closely followed the proceedings in the bankruptcy case involving Genesis Global Holdco, is optimistic in response to the announcement of a potential resolution.