Crypto Lender Genesis Files for Bankruptcy as FTX Contagion Spreads

Genesis, a crypto lending platform owned via undertaking capital company Digital Currency Group, joined crypto company BlockFi in submitting for financial disaster, the most recent crypto corporate to move belly-up amid allegations of fraud after the cave in of FTX past due remaining yr.

Genesis, the Latest to Fall

Genesis has been in dispute with crypto alternate Gemini, based via the Winklevoss twins, which says it owes about $900 million to Gemini shoppers on account of the lending product known as Earn. Earn program allowed Gemini customers to generate yields via lending their crypto belongings to a borrowing counterparty.

Genesis stated in its submitting with the U.S. Bankruptcy Court for the Southern District of New York that it had each belongings and liabilities within the vary of $1 billion to $10 billion and stated it could have greater than 100,000 collectors.

The submitting contains the father or mother corporate Genesis Global Holdco and two of its lending industry subsidiaries, Genesis Global Capital and Genesis Asia Pacific. The father or mother corporate has over US$150 million in money, which it plans to make use of to give a boost to its ongoing operations and restructuring procedure.

DCG’s Other Investments

Digital Currency Group (DCG), the father or mother corporate of Genesis, has invested in crypto exchanges Coinbase and Kraken, in conjunction with the Circle, which runs the stablecoin USDC, and blockchain analytics corporations Chainalysis, Dune Analytics, Elliptic, and Etherscan.

DCG subsidiaries additionally come with on-line crypto information outlet CoinDesk, which this week stated it employed Lazard to discover a possible sale. CoinDesk broke the scoop that resulted in the cave in of FTX.

DCG additionally owns Grayscale Investments, whose Grayscale Bitcoin Trust (GBTC) is the arena’s greatest bitcoin fund. In November, DCG stated turmoil in Genesis’ lending operations had no affect on DCG, and its subsidiaries and Grayscale stated its underlying belongings were not affected.

The Bottom Line

FTX’s implosion got here after bankruptcies at some other crypto lender and dealer, Voyager, centralized lending platform Celsius, and Three Arrows, suggesting that Genesis’ financial disaster might not be the remaining for crypto companies.

Separately, virtual asset company Nexo Capital agreed to pay $45 million in consequences to federal and state regulators to settle allegations it broke securities laws via providing an unregistered crypto lending product. The Securities and Exchange Commission stated Nexo’s Earn Interest product used to be a safety that are meant to had been registered as such with the company. The tremendous introduced Thursday is some other in a chain assessed via the SEC and different securities regulators for crypto monetary merchandise.