Cryptobank and broker Genesis are partially insolvent
Genesis’ lending division filed for bankruptcy protection in the US on Friday. The trading division is not affected by bankruptcy.
Genesis is one of the largest financiers of transactions with Bitcoin, Ethereum & Co.
Photo: Gabby Jones/Bloomberg
The turmoil following the crash of the cryptocurrency exchange FTX claims its next victim. The lending arm of cryptocurrency broker and lender Genesys filed for bankruptcy protection in the United States on Friday. Court documents show that Genesis Global Capital has assets and liabilities ranging from $1 billion to $10 billion. The company estimated the number of creditors at 100,000.
However, the company confirmed that the commercial division was not affected by the bankruptcy. Customers can buy and sell foreign currencies online as normal. Genesis paused lending and blocked withdrawals in response to the FTX scandal in November. In addition, the company laid off a significant portion of the workforce.
At the same time, Genesis traded blows with asset manager Gemini. The two treaties jointly offered a product called Earn, which the US Securities and Exchange Commission has now classified as illegal. It allowed Gemini customers to lend their cryptocurrency holdings to Genesis to earn interest. Gemini co-founders Cameron and Tyler Winklevoss have accused Genesis of paying more than $900 million to Earn participants. Shortly after Genesis declared bankruptcy, Cameron Winklevoss demanded a fair offer to creditors on Twitter, or else Genesis parent company Digital Currency Group (DCG) and its chairman Barry Silbert would immediately sue.
Giant’s Fall
Genesis is one of the largest financiers of transactions with Bitcoin, Ethereum & Co. Unlike traditional banks, however, money lenders are not regulated in this area. Nor does it belong to any deposit protection fund that covers any losses in the event of bankruptcy.
Genesis says it issued $130.6 billion in loans in 2022 and traded $116.5 billion in crypto assets. At the end of the third quarter of 2022, $3 billion of loans were outstanding. According to insiders, the largest debtors of Genesis are Alameda, the brokerage house of FTX founder Sam Bankman-Fried, and Crypto hedge fund Three Arrows. The latter faced difficulties in the summer due to the collapse of the TerraUSD cryptocurrency and led to the bankruptcy of the Celsius cryptocurrency bank with it.
Reuters
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