Embracing Distress: Terra/Luna collapse - May 2022; 3AC liquidation - June 2022; Voyager and Celsius bankruptcies - July 2022; FTX bankruptcy - November 11 and 14, 2022. Genesis Global presented its first day hearing in bankruptcy court with the events leading to its Chapter 11 filing, a reminder of the great reset of 2022. Genesis will live on – the only question is under what conditions. A Special Committee, creating distance from the parent company, was formed in November to expedite the exit from bankruptcy. There’s no magic. Genesis presented a plan where unsecured creditors swap debt for equity in the new entity, plus their pro-rata share of Genesis cash on the balance sheet. Losses crystallize. It’s a healthy way forward – culling bad assets and starting fresh. It is also a reminder of the unique opportunity in distressed digital credit. Distress brings the prospect of fresh capital at favorable terms, not extinction. Bitcoin mining is the most powerful case in point. Revenues to miners are annualizing $6.2 billion so far this year. There was too much investment in bitcoin mining infrastructure at too high a cost. Revenues are not sufficient to support obligations as a result. When a bond trades cents on the dollar, it signals that the company needs to be restructured. The sooner, the better. Asset write-downs are calibrated so that capital returns from new, austere revenue projections can sustain the new entity. It is not a systemic crisis. It is the harsh reality of a well-functioning market. Failure is never the problem – ignoring it is. Ecosystems are strengthened by failure.