Genesis Prepares to File for Bankruptcy This Week

Written by C, Fiona

Last updated: 2023-01-19

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Crypto lender Genesis is preparing to file for bankruptcy as early as this week. It halted withdrawals following FTX’s bankruptcy.

According to Bloomberg report on Jan. 18, Genesis previously said it was considering a bankruptcy filing if it were unable to raise cash amid a liquidity crunch — a situation similar to that preceding crypto exchange FTX’s Chapter 11 filing in November. Citing people with knowledge of the situation, Bloomberg reported Genesis could file for bankruptcy as soon as this week.

The report followed the United States Securities and Exchange Commission announcing on Jan. 12 that it had charged Genesis and crypto exchange Gemini with offering unregistered securities through Gemini’s “Earn” program. The case is ongoing.

Gemini co-founder Cameron Winklevoss has also released several open letters through social media calling out Digital Currency Group CEO Barry Silbert, claiming Genesis owed Gemini $900 million for funds Gemini lent to it as part of the same program. DCG said Winklevoss’ allegations were “malicious, fake, and defamatory attacks.”

Many of the reported liquidity issues may stem from the collapse of the crypto venture capital firm Three Arrows Capital in 2022. Silbert told shareholders in January that Three Arrows owed Genesis $447.5 million and 4,550 Bitcoin — worth roughly $78 million at the time. However, Genesis also held roughly $175 million on FTX prior to its bankruptcy in November, likely contributing to the firm’s liquidity crunch and potential insolvency. Genesis suspended withdrawals following FTX’s bankruptcy filing.

If Genesis also files for bankruptcy, it would be the latest in a series of collapses including Terra ecosystem, FTX, Three Arrows Capital (3AC), Voyager Digital, Celsius Network, and BlockFi.

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