The company and its subsidiaries Genesis Global Capital and Genesis Asia Pacific have filed for creditor protection in a US court. Genesis Global Capital stated that it has assets and liabilities in the range of one to ten billion dollars (up to approximately 221 billion CZK). He estimates the number of his creditors at 100,000. The sum of the top five unsecured claims is about $3.4 billion.
Genesis Global Capital, one of the largest crypto lenders, stopped withdrawals in mid-November last year after the FTX crash. Its parent company, Digital Currency Group (DCG), has been in confidential talks with various groups of creditors due to its lack of cash. She warned that if she fails to raise the funds, she does not rule out bankruptcy. DCG has come under financial pressure following the collapse of hedge fund Three Arrows Capital last June.
Genesis Global Trading and other divisions of DCG, which deal with crypto-asset trading and custody, are not part of the bankruptcy proposal.
I am innocent, the founder of the FTX exchange has pleaded not guilty to the billion-dollar fraud
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Illegal sale of securities
Genesis Global Holdco brokered digital assets for financial institutions such as hedge funds and asset managers. At the end of last year’s third quarter, it had nearly $3 billion in active loans, down $11.1 billion from a year earlier, according to its website. Last year, Genesis provided $130.6 billion worth of cryptocurrency loans and traded $116.5 billion worth of assets.
Genesis’ two biggest borrowers were hedge fund Three Arrows Capital and Alameda Research, a trading firm closely linked to FTX, a Reuters source said. Both mentioned companies are in bankruptcy proceedings.
The collapse of the credit division affects, among others, the situation of the Gemini Trust cryptocurrency exchange, which has also previously suspended withdrawals. Gemini, in cooperation with Genesis, offered a crypto-lending product called Earn, and claims that Genesis owes it $900 million (almost CZK 20 billion) in connection with this product. Gemini management threatens to sue.
The U.S. Securities and Exchange Commission (SEC) said last week that it has charged firms Genesis and Gemini with illegally selling securities to hundreds of thousands of investors through their crypto lending program.
Bitcoins and other virtual currencies
There are many virtual currencies. One of the oldest and currently most popular are the so-called bitcoins. They were created as early as 2009, but have enjoyed greater popularity in recent years. This currency was created so that it cannot be influenced by any government or central bank.
Cybercoins are “minted” by a network of computers with specialized software programmed to release new coins at a steady but ever-decreasing rate. The number of coins in circulation should eventually reach 21 million, which should happen around 2140.
