As contagion spread through the industry, Genesis was left in dire financial straits and had to suspend withdrawals last November.
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The embattled crypto lender Genesis has filed for bankruptcy.
The Chapter 11 proceedings come after the company was badly exposed to two businesses that went spectacularly bust in 2022.
One of them was the crypto hedge fund Three Arrows Capital, and the other was FTX.
As contagion spread through the industry, Genesis was left in dire financial straits and had to suspend withdrawals last November.
It owes an estimated $900 million to 340,000 customers in an Earn program run by Gemini, an exchange owned by Cameron and Tyler Winklevoss.
Overall, Genesis and its entities estimate that it has 100,000 creditors and between $1 billion and $10 billion in liabilities.
The 50 biggest creditors are owed a whopping $3.5 billion.
Genesis was part of Digital Currency Group, a large crypto firm that also owns an array of other businesses — including the news outlet CoinDesk.
'Sunlight is the Best Disinfectant'
Cameron Winklevoss — who has been publicly sparring with DCG's CEO Barry Silbert on Twitter — has declared that the bankruptcy is a "crucial step" in ensuring Gemini can recover assets for its customers.
He once again claimed that Silbert has continued to refuse to offer creditors a fair deal, adding:
"Crucially, the decision to put Genesis into bankruptcy does not insulate Barry, DCG, and any other wrongdoers from accountability."
Winklevoss added that his company has been preparing to take direct legal action against DCG, Silbert and others — and warned:
"Unless Barry and DCG come to their senses and make a fair offer to creditors, we will be filing a lawsuit against Barry and DCG imminently."
He also vowed to "use every tool available to us in the bankruptcy court to maximize recovery for Earn users" — and expressed hope that the legal proceedings will deliver a thorough explanation into what happened.
"Sunlight is the best disinfectant."
