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Home Crypto News

Genesis Creditors Fleeing The Bankrupt Platform

Admin by Admin
February 7, 2023
in Crypto News
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Genesis Bankruptcy Judge Grants Extension For Mediation Period Between Genesis And Creditors
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Before Genesis filed for bankruptcy, many of its creditors were confident that they would receive all or most of their money back.

Months later, some Genesis creators are leaving the bankrupt lender, even with a fraction of their investment into the company, with no conviction that they will get most of their money back.

Stephen Sokolowinski, a crypto mining executive, recently sold $4 million of his claim against Genesis at $1 million to Jefferies, an investment bank. The sale marked the first ever publicly disclosed sale of the company’s bankruptcy claim. Other listed sales appear to have traded hands through Xclaim. 

According to Sokolowski, he had in mind that his Genesis claim would be twice as much worth what he had purchased it for, based on his latest financials.

However, Sokolowski believes that he would see only a fraction of it if he stuck around through the bankruptcy process. In addition, he mentioned that he has, over time, lost faith in any information that Genesis is putting out.

The current chief operating officer of Prohashing would also say that he has spent over 100 hours analyzing what he, and others like him, the creditors, thought were actual Genesis’ financials. In his observation, he thought Genesis was the safest among the crypto lenders’ financials.

However, he has since retracted the statement and said that the balance sheet was ‘almost certainly false.’ Even though he cannot confirm at what point this happened, they got ‘looser and looser’ in loan terms and common sense.

Other creditors are following suit and steadily losing faith in getting paid by the company. Bitvavo, a Dutch exchange that owed about $300 million to Genesis, mentioned its rejection of a proposal from Genesis whereby they would pay 70% of what they owed.

Xclaim says that the company’s bankruptcy claims only range from $0.35 on the dollar. Matthew Sedigh, Xclaim’s CEO, has, however, stated that there appears to be rising interest from crypto hedge funds and traditional Wall Street firms, among others, in making purchases on the claims listed from bankrupt crypto lenders. 

Some of the top firms linked are Barclays, Morgan Stanley, and Bank of America.

However, whether they make purchases for themselves or their clients still needs to be clarified. Sedigh added that everyone is poking around as they have processed more claims over the past five weeks than ever before.

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