The storm for the crypto market is not over as yet another business in the industry has filed for bankruptcy.
According to CNBC, Cryptocurrency lending company Genesis filed for bankruptcy protection on January 19 in Manhattan Federal Court. This is the next “victim” of the crypto crisis after the FTX exchange collapsed. The end of Genesis is a blow to the Digital Currency Group (DCG).
The company listed more than 100,000 creditors in its bankruptcy filing. Along with that is the total amount of liabilities from $1.2 billion to $11 billion.
“We look forward to fostering dialogue with DCG and its creditor advisors. Meanwhile, we will find ways to maximize value and create the best opportunity for the business to grow in the future,” said Derar Islim, interim CEO of Genesis.
Genesis’ creditors include the Gemini exchange with a $765.9 million loan. In addition, this business also owes Donut Company and VanEck fund the amount of USD 78 million and USD 53.1 million, respectively.
Gemini co-founder Cameron Winklevoss wrote on Twitter that DCG CEO Barry Silbert “continues to refuse to offer fair settlements to creditors”.
“We are preparing legal proceedings directly against Barry, DCG, and others,” said Cameron Winklevoss.
This is the expected outcome because of the series of crises stemming from Genesis’ exposure of up to $2.36 billion in funds to the failed investment fund Three Arrows Capital (3AC) in August 2022. , resulting in the company having to lay off 20% of its employees as well as CEO Michael Moro announcing his resignation afterward.
Not able to stabilize after the above shock, Genesis was strongly affected by the FTX crash, trying to raise $ 1 billion to save the situation but failing. Even though Binance also announced that it would not participate in the “rescue” of Genesis at that time, the company was forced to continue to lay off an additional 30% of its staff.
The collapse of the FTX exchange froze the market and caused investors all over the world to massively withdraw their money. According to The Wall Street Journal, after the FTX crisis, Genesis Company was forced to call for a $1 billion emergency bailout. However, this business was unsuccessful in its search for help.
Genesis suffered major losses from loans to investment funds Alameda Research and Three Arrows Capital. Both companies went bankrupt last year.
“We are still struggling to overcome unprecedented challenges and have had to make the difficult choice of downsizing globally. This is part of our efforts to stay in business.” a Genesis spokesperson said.
Last year, Genesis had a round of layoffs after Three Arrows went bankrupt. Genesis lends this fund $2.4 billion
