The turmoil following the collapse of cryptocurrency exchange FTX is claiming its next victim. The lending arm of cryptocurrency brokerage and lender Genesis filed for bankruptcy protection in the United States on Friday. Genesis Global Capital has assets and liabilities ranging from $1 billion to $10 billion, court documents show. The company estimated the number of creditors at 100,000.
However, the company stressed that the trading division was not affected by the bankruptcy. Customers could buy and sell cyber currencies as usual. Genesis temporarily stopped lending and blocked withdrawals in response to the FTX scandal in November. In addition, the company kicked out most of its workforce.
At the same time, Genesis trades blows with asset manager Gemini. The institutions had jointly offered a product called “Earn”, which the US Securities and Exchange Commission has now classified as illegal. It enabled Gemini clients to lend their cyber currency holdings to Genesis at interest. Gemini founders Cameron and Tyler Winklevoss have accused Genesis of owing more than $900 million to Earn program participants. Shortly after Genesis filed for bankruptcy, Cameron Winklevoss called on Twitter for a fair offer to creditors or Genesis parent company Digital Currency Group (DCG) and its boss Barry Silbert would be immediately sued.
Genesis is one of the largest financiers of transactions with Bitcoin, Ethereum & Co. However, unlike traditional banks, lenders in this area are hardly regulated. They also do not belong to a deposit protection fund that absorbs any losses in the event of insolvency.
Genesis says it will have issued $130.6 billion in loans and traded $116.5 billion in crypto assets by 2022. At the end of the third quarter of 2022, $3 billion in loans was outstanding. According to insiders, the largest debtors are Genesis Alameda, the brokerage firm of FTX founder Sam Bankman-Fried, and the insolvent crypto hedge fund Three Arrows. The latter ran into trouble in the summer when the cyber currency TerraUSD collapsed, bankrupting the crypto bank Celsius.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
