Genesis Revealed With US$2.36 Billion Exposure To 3AC As Firm Goes Bankrupt

Following its assets being frozen by a New York court, the liquidation process of Three Arrows Capital is now in the works after the firm has filed a Chapter 15 bankruptcy. One of the creditors, Genesis Asia Pacific, is now revealed to have lent the crypto firm around US$2.36 billion, making it one of the claimants of the firm’s US$2.8 billion outstanding obligations.

Genesis’s loan to the crypto firm, which has become undercollateralized due to the massive price falls, was originally sent for arbitration to settle the unpaid debts. But it dropped the arbitration plans after British Virgin Island courts begun processing the bankruptcy application and appointed Teneo Restructuring to oversee the liquidation process.

“Both the [parent company Digital Currency Group] and Genesis balance sheets remain strong. With no remaining exposure to Three Arrows Capital, Genesis continues to be well-capitalized and its operations are business as usual,” said the parent firm DCG in a statement.

Genesis CEO Michael Moro previously revealed that the company’s loans to 3AC had a weighted average margin requirement of over 80%–which the crypto firm failed to meet. Genesis then moved to sell the collateral, with its parent firm DCG also stepping in to assume some of the liabilities.

Earlier in July, 3AC filed a Chapter 15 bankruptcy to shield its US assets from lawsuits. But the creditors are apparently having trouble seeking the crypto hedge fund’s cooperation with respect to the liquidation process. They filed court documents in a New York court manifesting their frustration that the firm’s founders–Zhu Su and Kyle Davies–have “not yet begun to cooperate.”

But founder Zhu Su tweeted a contradiction to this claim, saying their good faith to cooperate “was met with baiting.”

3AC founders’ legal counsel also said that they will not be proceeding with the set call between the founders and the creditors, and will stay as such depending on the creditors’ answer to their queries.

The liquidators, the 3AC founders, and the claimants are scheduled to meet today and address the liquidation proceedings.

Information for this briefing was found via The Block and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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