FinTech news in bankruptcy category

Genesis Global Holdco and two of its lending business subsidiaries Genesis Global Capital and Genesis Asia Pacific filed voluntary petitions under the bankruptcy code for SDNY, its press release stated. On January 12, the U.S. Securities and Exchange Commission charged Genesis and cryptocurrency exchange, wallet, and custodian Gemini for the unregistered offer and sale of securities to retail investors through Gemini Earn crypto asset lending program. The firm struggled to raise capital for its lending unit, cut 30% of its staff in early January and took a financial hit from major catastrophic crypto events last year like the collapse of crypto hedge fund Three Arrows Capital and the decline of crypto exchange FTX. Aside from Genesis, DCG is the parent company of digital currency asset manager Grayscale, media company CoinDesk, mining and staking company Foundry, digital asset exchange and wallet Luno and API-centric platform TradeBlock.

But the filing deems account holders with the Earn program as unsecured creditors of Celsius, which means their recovery depends on the distributions to unsecured creditors under a Chapter 11 bankruptcy plan. The verdict gives Celsius ownership of the $4.2 billion in cryptocurrency that users deposited into its high-interest Earn program, according to a 45-page filing from the U.S. Bankruptcy Court Southern District of New York on Wednesday. A federal bankruptcy judge ruled cryptocurrencies deposited into interest-bearing accounts at Celsius Network, a now-bankrupt cryptocurrency lending platform, actually belong to the firm – thanks to the fine print. Last month, Celsius fought with customers in court over ownership of deposited funds as it wanted to sell about $18 million worth of stablecoins from Earn accounts to fund its organization.

A group of Voyager Digital customers filed a class-action suit in Florida federal court against Cuban as well as the basketball team he owns, the Dallas Mavericks, alleging their promotion of the crypto platform resulted in over 3.5 million investors losing $5 billion collectively.

Celsius Network, one of the world’s largest cryptocurrency lenders, has filed for bankruptcy protection, a month after freezing customer assets in the wake of sharp turbulence in the crypto market that has toppled business models of several firms. The New Jersey-headquartered startup, which was valued at $3.25 billion when it extended its “oversubscribed” Series B \[…\]