Cryptocurrency trading platform Genesis, which filed for Chapter 11 bankruptcy yesterday, has also revealed how much it owes to whom. In the documents, in which many crypto money companies are creditors, it is seen that the Stellar Foundation, which is behind XLM, an altcoin, has a receivable of $ 13 million. Here are the details…
Genesis owes Stellar behind altcoin XLM
The Stellar Development Foundation, a nonprofit founded to support growth in the Stellar Blockchain, was among the top creditors of crypto lending giant Genesis, which filed for bankruptcy protection on Thursday. The foundation has a $13 million claim against Genesis, according to bankruptcy filings. In a statement, the foundation confirmed it had loaned Genesis approximately $13 million in 2022, but described the amount as “insignificant” when compared to the rest of its treasury.
According to a Stellar Development Foundation representative, “This debt represents an insignificant portion of our overall treasury and does not affect our operations in any way.” According to its website, “The Stellar Development Foundation currently has 30 billion XLM to be used to promote and develop Stellar.” So at current prices, the paper value of Stellar’s treasury of native XLM tokens is over $200 million.
While the foundation claims to have made it through the Genesis debacle relatively unscathed, the entanglement of an ecosystem fund’s assets with an over-the-counter crypto lending desk underscores the risk of the Genesis bankruptcy contagion. Moreover cryptocoin.com As we reported, among the largest Genesis creditors to emerge in Thursday’s bankruptcy filings were the pension funds of Fairfax County, Virginia, and MoonAlpha Finance, the team behind Babel Finance, which has $150 million in debt. According to Genesis’s bankruptcy filings, it owes $3.5 billion to its 50 largest creditors, including the Stellar Development Foundation.
What awaits Genesis creditors?
According to Eric Snyder, partner at Wilk Auslander LLP, three of Genesis’ crypto lending businesses have filed for bankruptcy protection, which means creditors will likely take some blows. Snyder, head of the firm’s bankruptcy department, said it was currently unknown how much “cutting” Genesis’ creditors would take. A deduction refers to the less than market value placed on an asset used as collateral for a loan.
Snyder said that Genesis companies’ bankruptcy filings include a plan, but not a “disclosure statement” that typically includes what’s in the plan. “The question is, what is the value of the collateral?” said. Whether the collateral is cash, real estate or securities is one thing. But when it comes to crypto, “it is very difficult to say what the markets are. For example, we know that if they are holding the FTT coin, it will be of very limited value. So we need to understand what kind of cryptocurrency they are.
Snyder said that if the companies fail to sell, a trustee for creditors will “run the operation until a buyer is found” and “basically agree that they’ve given up.” Genesis owes more than $3.5 billion to its top 50 creditors. In a separate filing Friday, Genesis said it has over $5 billion in liabilities. Still, Snyder said it may take a “long time” to understand Genesis’ assets and liabilities.
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