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Massive crypto lender Genesis Global Trading Inc. laid off 30% of its staff and is considering filing for bankruptcy, according to people familiar with the matter, the latest sign of financial turmoil at the crypto lender, the Wall Street Journal reported. The layoffs weren’t confined to one department and were across the company, some of the people said. Genesis has 145 employees left after Thursday’s layoffs. Genesis is working with investment bank Moelis & Co. to evaluate its options for the future, including a potential chapter 11 filing, said some of the people. The crypto lender has become the latest digital asset firm to struggle for survival. Last year was marked by a series of crypto bankruptcies as the Federal Reserve boosted interest rates, deflating the most speculative investments. Blowups in the little-regulated sector trickled down to other companies, demonstrating the interconnectedness of the nascent industry. The Fed has signaled it will continue raising rates. Investors are bracing for more pain in crypto. Genesis suffered steep losses from loans it supplied to the now-defunct trading firm Alameda Research and crypto hedge fund Three Arrows Capital. Both Alameda and Three Arrows filed for bankruptcy last year.

The New York Attorney General Letitia James is suing Alex Mashinsky, co-founder and former CEO of bankrupt crypto lender Celsius Network, alleging he defrauded hundreds of thousands of investors, including 26,000 New Yorkers, YahooFinance.com reported. The lawsuit claims that Mashinsky of lying to investors, concealing Celsius’s financial problems, and failing to meet state law registration requirements under his watch. "The law is clear that making false and unsubstantiated promises and misleading investors is illegal," James said in a statement. "Today, we are taking action on behalf of thousands of New Yorkers who were defrauded by Mr. Mashinsky to recoup their losses." Celsius Network was a lending platform that took in crypto and cash deposits from retail investors, and then lent them out to institutional investors to pay customers high rates of interest. In its statement, the New York AG's office said: "Mashinsky repeatedly claimed that Celsius made safe, low-risk investments and only lent assets to credible and reputable entities. However, investors' assets were routinely exposed to high-risk counterparties and strategies, many of which resulted in losses that Mashinsky concealed from investors."

A Texas bankruptcy judge ordered Hess Corp. to make a written commitment of financial support in subsidiary Honx’s chapter 11 case, which aims to resolve hundreds of asbestos-injury claims from an oil refinery it used to own in St. Croix in the U.S. Virgin Islands, WSJ Pro Bankruptcy reported. Judge Marvin Isgur of the U.S. Bankruptcy Court in Houston, Texas, said in his bench ruling Wednesday he agreed with asbestos claimants’ argument that no rational negotiation can happen until Hess spells out its financial contribution. “That financial commitment must be non-discretionary on its part. It can be mathematically based in terms of a formula, or it can be in a fixed amount, or it can be a combination of those,” Judge Isgur said, adding that if Hess fails to submit the commitment within 30 days, he will throw the bankruptcy case out of court. Hess pushed Honx Inc., previously known as Hess Oil New York Corp., into bankruptcy in April to drive a settlement of hundreds of personal-injury lawsuits stemming from alleged exposure to asbestos, silica and other toxic substances, court papers say. At the time of the bankruptcy filing, about 580 claims had been filed and hundreds more were in the pipeline.

U.S. managed services and cloud connectivity provider GTT, formerly called Global Telecom and Technology, has emerged from its chapter 11 bankruptcy cases after more than two years of corporate and financial restructuring, BNAmericas.com reported. The company, which maintains ethernet and IP sites in São Paulo, Rio de Janeiro and Mexico City, first filed for bankruptcy protection in October 2021. "Over the past two years, we have concentrated relentlessly on transforming our business into a customer-focused, managed services provider with a culture of continuous improvement. As we begin 2023 on a new path, I’m tremendously excited about the opportunities ahead,” CEO Ernie Ortega said. Throughout this period, the company has managed to reduce its debt by around $2.8 billion and bring in new investors. For example, it sold its infrastructure division to I Squared Capital for $2.1 billion, cutting debt by approximately 80%, according to GTT.

Yak Access LLC, a materials company majority-owned by private-equity firm Platinum Equity, is nearing a deal to restructure its balance sheet out of court, WSJ Pro Bankruptcy reported. Yak makes hardwood and composite mats for construction sites, serving the oil and gas pipeline, industrials, and renewables sectors. The company has been under financial pressure due to low activity in the market for pipeline construction, making it difficult to service its nearly $1 billion debt load. The Columbia, Miss.-based company has engaged with its lenders to iron out the terms of a restructuring agreement that would involve Platinum putting in some more money and lenders swapping their holdings into new facilities. Yak Access is represented by law firm Milbank LLP and financial adviser Houlihan Lokey Inc., while senior lenders are represented by law firm Akin Gump Strauss Hauer & Feld LLP. Platinum acquired a majority stake in Yak Access in 2018 from Jones Cos. and Beasley Forest Products, which still own a minority stake in the business.

Subsidiaries of an Illinois-based Burger King franchisee, one of the largest in the brand’s U.S. system, reportedly have filed for chapter 11 protection at units operating about 90 restaurants, the Nation's Restaurant News reported. Bloomberg Law reported that chapter 11 filings submitted early this week by TOMS King Holdings LLC’s operating subsidiaries included about $35.5 million in secured debt to Bank of America. Another $14 million of unsecured debt was held by vendors, landlords and Burger King Corp., according to filings. The chapter 11 filing was in the U.S. Bankruptcy Court for the Northern District of Ohio. The suburban Chicago company said its business was impacted by loss of business during the pandemic without decreases in rent, debt service and other costs.

A bankruptcy judge ruled that digital coins deposited in Celsius Network LLC’s interest-bearing accounts belong to the firm, ruling against thousands of customers and deciding a key legal issue in crypto-related insolvencies, the Wall Street Journal reported. Judge Martin Glenn said yesterday that $4.2 billion in cryptocurrency deposits are the property of Celsius, clearing the way for the company to use its digital assets as it sees fit, while also dealing a blow to the hopes of thousands of customers by declaring them unsecured creditors. The question of who has ownership rights over crypto assets at bankrupt digital exchanges, trading firms and other platforms is central to the chapter 11 cases of Celsius and other firms that went bankrupt last year, including FTX and BlockFi Inc. Each firm’s rights to its customers’ digital assets are spelled out in their terms of use, and Celsius’s contract with its users is “unambiguous” about the firm’s ownership rights, Judge Glenn said in his ruling. Bankruptcy courts have only begun to unravel what those terms of use mean for the billions of dollars in cryptocurrencies trapped on insolvent platforms.

U.S. prosecutors are in the process of seizing shares of Robinhood Markets Inc. tied to Sam Bankman-Fried, who has been charged with fraud in the collapse of the FTX cryptocurrency exchange, a U.S. attorney told a judge yesterday, Reuters reported. The Department of Justice did not believe the 56 million shares of Robinhood, worth about $465 million, were property of a bankruptcy estate, U.S. attorney Seth Shapiro told U.S. Bankruptcy Judge John Dorsey, who is overseeing the FTX bankruptcy. Shapiro said that competing claims to shares of the stock-trading app could be worked out in a forfeiture proceeding. Bankrupt crypto firm BlockFi, FTX and liquidators in Antigua have all laid claim to the Robinhood stock, along with Bankman-Fried. Prosecutors have accused Bankman-Fried of engaging in a years-long "fraud of epic proportions" that cost investors, customers and lenders potentially billions of dollars by using customer deposits to support his Alameda Research hedge fund. Bankman-Fried pleaded not guilty to counts of wire fraud and conspiracy. He has acknowledged risk-management failures at FTX, but has said he did not believe he was criminally liable. Bankman-Fried purchased about 7.42% of Robinhood's stock through Emergent Fidelity Technologies Ltd, using funds borrowed from Alameda Research, according to an affidavit he filed in December in an Antigua court.

Bankrupt movie-theater chain Cineworld Group PLC said it continues to miss its box-office projections due to challenging market conditions as it gears up to sell itself out of chapter 11, the Wall Street Journal reported. Joshua Sussberg, a lawyer for U.K.-based Cineworld, owner of Regal Cinemas, told Judge Marvin Isgur of the U.S. Bankruptcy Court in Houston, Texas, on Wednesday that the company’s restructuring effort since its bankruptcy filing in September has been hindered by the lackluster box-office performance. In addition, there haven’t been many blockbusters because the COVID-19 pandemic disrupted film production in Hollywood. “The box office receipts have significantly and consistently underperformed expectations during these cases,” Sussberg said. Cineworld’s average number of admissions from September to December was 37% less than expected, he said. In December alone, the admission number was 44% less than what the company had projected when it entered chapter 11, he said.

Celsius Network LLC has agreed to let Core Scientific Inc. shut off more than 37,000 crypto mining rigs that the bankrupt digital-asset lender hasn’t been fully paying for, resolving a months-long conflict, Bloomberg News reported. Core, a Bitcoin miner that hosts rigs for third parties, itself filed for bankruptcy last month and partially blamed non-payment by Celsius for its downfall. Their hosting deal allows Core to pass on some power costs to Celsius, but the company hasn’t been paying those bills since it filed for chapter 11 protection in July, according to lawyers for Core Scientific. The case could serve as legal precedent for other Core Scientific customers disputing the terms of hosting agreements with the company. Over the last year, soaring energy prices due to extreme weather conditions and Russia’s invasion of Ukraine have sharply driven up operating costs for electricity-intensive mining operations. About 41% of Core’s total fleet — or 100,000 servers — were dedicated to hosting its customers as of the company’s Nov. 7 operational update.