Genesis, a crypto lending platform owned by venture capital firm Digital Currency Group, joined the crypto firm BlockFi filing for bankruptcy, the latest crypto firm to go bankrupt amid fraud allegations after the collapse of FTX at the end of last year.
Key points to remember
- Genesis’ holding company and two lending subsidiaries have filed for bankruptcy, joining a long list of crypto companies in Chapter 11 proceedings.
- Genesis’s total liabilities and assets are between $1 billion and $10 billion, according to its bankruptcy filing.
- The FTX contagion continues to spread, with the pressure now on Genesis’ parent company, Digital Currency Group.
Genesis, the last to fall
Genesis has been in conflict with the crypto exchange Geminifounded by the Winklevoss twinswho says it owes about $900 million to Gemini customers because of the loan product called Earn. The Earn program allowed Gemini users to generate returns by lending their crypto-assets to a borrowing counterparty.
Genesis said in its filing with the U.S. Bankruptcy Court for the Southern District of New York that it has both assets and liabilities between $1 billion and $10 billion and said it may have more than $100,000. creditors.
The filing includes parent company Genesis Global Holdco and two of its lending business subsidiaries, Genesis Global Capital and Genesis Asia Pacific. The parent company has more than $150 million in cash, which it plans to use to support its ongoing operations and restructuring process.
Other DCG investments
Digital Currency Group (DCG), the parent company of Genesis, has invested in crypto exchanges Coinbase and Kraken, as well as the Circle, which manages the stablecoin USDC and blockchain analytics firms Chainalysis, Dune Analytics, Elliptic, and Etherscan.
DCG affiliates also include an online crypto press briefing CoinDeskwho this week said he hired Lazard to explore a potential sale. CoinDesk broke the news that led to the collapse of FTX.
DCG also has Grayscale Investments, of which Grayscale Bitcoin Trust (GBTC) is the largest bitcoin fund in the world. In November, DCG said turmoil in Genesis lending operations had no impact on DCG, and its subsidiaries and Grayscale said its underlying assets were unaffected.
FTX’s implosion came after the bankruptcies of fellow crypto lender and broker, Voyager, centralized lending platform Celsius and Three Arrows, suggesting the Genesis bankruptcy may not be the last for crypto firms. crypto.
Separately, digital asset firm Nexo Capital has agreed to pay $45 million in penalties to federal and state regulators to settle allegations that it violated securities rules by offering an unregistered crypto lending product. . The Securities and Exchange Commission said Nexo’s Earn Interest product was a security that should have been registered as such with the agency. The fine announced Thursday is part of a series being assessed by the SEC and other securities regulators for crypto financial products.