According to documents filed with the court on February 4, a committee consisting of seven members has been constituted to represent the interests of unsecured creditors in the bankruptcy case involving Genesis Global.
The committee will act as the representatives of the creditors in court, and it will have the right to participate in the restructuring plan as well as the right to be consulted before to key decisions. In most cases, members are chosen at random from a list including the 20 biggest unsecured creditors.
Mirana Asset Management, which is a division of the cryptocurrency exchange Bybit, SOF International, Digital Finance Group, and the cryptocurrency exchange Bitvavo are some of the organisations that have been selected as members, along with three individual creditors: Amelia Alvarez, Richard Weston, and Teddy Andre Amadeo Goriss.
The United States Trustee is an executive branch institution under the Department of Justice that is responsible for managing bankruptcy proceedings. William Harrington, a spokesman for the United States Trustee, was the one who appointed the organisation. In the process of filing for bankruptcy, one of the most significant steps is to establish a committee of creditors.
Bitvavo is one of the largest creditors, having an exposure of more than $290 million; it is followed by Mirana, which has an exposure of $150 million, and Digital Finance Group, which has an exposure of $37 million.
On January 19, Genesis Capital, which includes Genesis Global Holdings and its lending business subsidiaries Genesis Global Capital and Genesis Asia Pacific, filed for bankruptcy, alleging potential liabilities of up to $10 billion.
Two months after discovering liquidity concerns as a result of the failure of the cryptocurrency exchange FTX, the firms filed protection under Chapter 11 of the Bankruptcy Code. Since November 16, 2022, the Genesis Global Capital platform has not allowed for any withdrawals to be processed.
On January 24, a group of creditors filed a securities class-action complaint against the Digital Currency Group, the parent company of Genesis, as well as its creator and CEO, Barry Silbert. The lawsuit alleges that the defendants violated federal securities laws.
In the case, it is alleged that Genesis engaged in securities fraud by concocting a plan to defraud prospective and current lenders of digital assets by making assertions that were false and deceptive. Plaintiffs believe that Genesis knowingly misrepresented its financial status, which they claim constitutes a violation of Section 10 of the United States Securities Exchange Act (b).