Crypto lender Genesis files for bankruptcy protection
David Hollerith
·Senior Reporter
Fri, January 20, 2023
Crypto lender Genesis Global Capital filed for Chapter 11 bankruptcy protection in New York early Friday morning, marking the latest business in the industry to file for bankruptcy as the fallout from last year's collapse in crypto prices continues to ripple through markets.
The filing estimates the firm has between $1 billion and $10 billion assets and between $1 billion and $10 billion in liabilities, with more than 100,000 estimated creditors.
A court document file later Friday showed Genesis held $5.1 billion in liabilities in the weeks following its withdrawal freeze on November 16.
The Chapter 11 filing is a long time coming for Genesis, a wholly-owned subsidiary of the Digital Currency Group (DCG), which took major losses beginning in June of last year and ultimately could no longer operate following the collapse of crypto exchange FTX.
David Hollerith
·Senior Reporter
Fri, January 20, 2023
Crypto lender Genesis Global Capital filed for Chapter 11 bankruptcy protection in New York early Friday morning, marking the latest business in the industry to file for bankruptcy as the fallout from last year's collapse in crypto prices continues to ripple through markets.
The filing estimates the firm has between $1 billion and $10 billion assets and between $1 billion and $10 billion in liabilities, with more than 100,000 estimated creditors.
A court document file later Friday showed Genesis held $5.1 billion in liabilities in the weeks following its withdrawal freeze on November 16.
The Chapter 11 filing is a long time coming for Genesis, a wholly-owned subsidiary of the Digital Currency Group (DCG), which took major losses beginning in June of last year and ultimately could no longer operate following the collapse of crypto exchange FTX.
Genesis logo displayed on a phone screen is seen through the broken glass in this illustration photo taken in Krakow, Poland on December 1, 2022. (Photo by Jakub Porzycki/NurPhoto via Getty Images)
Started in 2013, Genesis aimed to be the first all-in-one Wall Street prime broker for digital assets.
The company launched its over the counter lending business in March of 2018. By the fourth quarter of that year, the lending desk had originated $500 million in loans for the period and $1.1 billion in total.
Exactly three years later, at the height of crypto mania, the lending desk's loan originations exploded to $50 billion for the quarter and $131 billion for all of 2021.
By June of last year, that mania had begun unwinding, with crypto's total market value dropping by more than half in a matter of weeks after major crypto hedge fund — and Genesis borrower — Three Arrows Capital defaulted on $1.2 billion borrowed from Genesis.
In mid-August, Genesis' then-CEO Michael Moros stepped down as the company laid off 20% of its staff as part of a reorganization meant in part to overhaul its risk management practices.
Three months later, Genesis suspended loan redemptions and originations, with new interim CEO Derar Islim saying "abnormal withdrawal requests" following the collapse of FTX had "exceeded our current liquidity." A declaration document from Friday reveal this event amounted to a $827 million "run on the bank."
The shutdown forced crypto exchange Gemini to suspend its own lending program, Earn, which Genesis served as partner for. Some 340,000 Gemini Earn customers are now Genesis creditors.
Despite its efforts to attract additional outside capital, Genesis had no luck. Genesis laid off 30% of its staff on Jan. 5 of this year. Soon after, DCG shuttered its newer wealth management division, HQ, and more recently, suspended its shareholder dividend.
Over the first two weeks of January, Gemini co-founder and president Cameron Winklevoss refocused the company's issues with Genesis on its parent company, DCG.
In two open letters, Winklevoss claimed DCG CEO Barry Silbert had engaged in "bad faith stall tactics," and later said the executive and others misled Gemini in disclosing details of Genesis' financial health. Winklevoss also called for Silbert to step down as DCG CEO.
In response, Silbert issued a letter to DCG shareholders, which said in part: "It has been challenging to have my integrity and good intentions questioned after spending a decade pouring everything into this company."
Genesis has retained New York legal and financial firms Cleary Gottlieb Steen & Hamilton, Alvarez & Marsal, and Moelis. Kroll will serve as the restructuring administrator and publicly hosting its docket.
Along with Genesis Global Capital LLC, the filing includes affiliates Genesis Asia Pacific Pte. Ltd and Genesis Global Holdco.
The first two corporations are "100% owned by Genesis Global Holdco, LLC" and have estimated assets and liabilities between $100 million and $500 million, the filing states. Genesis Global Holdco is wholly owned by Digital Currency Group.
Genesis owes more than $3.4 billion to its top 500 creditors, which includes loans payable to VanEck's New Finance Income Fund ($53 million), DCG ($37.9 million), Caramila Capital Management ($21.5 million), LA-based Big Time Studios ($20 million), crypto trading outfit Cumberland ($18.7 million), as well as the Stellar Network's Development Foundation ($13 million).
George Glover
Thu, January 19, 2023
Barry Silbert, CEO of the Digital Currency Group crypto conglomerate.
REUTERS/Lucas Jackson
CoinDesk has hired bankers to explore a potential sale, according to the Wall Street Journal.
The crypto publication broke the story that triggered FTX's solvency crisis in November.
But its owners Digital Currency Group have been caught up in the liquidity crunch plaguing the crypto sector.
CoinDesk is exploring a potential sale after its owner Digital Currency Group was rocked by the turmoil in crypto markets in the wake of crypto exchange FTX's implosion, according to media reports.
The crypto-focused news site has hired $274 billion asset manager Lazard to advise it on a sale that would carve it out from CEO Barry Silbert's under-fire DCG, the Wall Street Journal first reported Wednesday.
Crypto conglomerate DCG is scrambling to resolve financial troubles caused by a liquidity crisis. It got caught up in the fallout from the collapse of Sam Bankman-Fried's FTX and of defunct cryptocurrency hedge fund Three Arrows Capital.
Its lending arm Genesis has cut 30% of its staff and is now reportedly preparing to file for bankruptcy this week as it struggles to pay back a $3 billion debt.
On November 2, CoinDesk was the first publication to report that FTX's sister trading firm Alameda Research held significant amounts of FTX's own native FTT token.
Rival exchange Binance responded by selling all its FTT holdings, triggering a solvency crisis that led to FTX filing for bankruptcy just nine days later.
US prosecutors alleged in December that FTX's now-disgraced founder Bankman-Fried knowingly funneled trading customers' money onto Alameda's balance sheet. That led to his arrest in the Bahamas and extradition to the US to face eight counts of fraud.
As well as CoinDesk and Genesis, DCG owns the crypto mining firm Foundry Digital, the asset manager Grayscale Investments, and the investing app Luno.
CoinDesk and DCG didn't immediately respond to Insider requests for comment.
Read more: Crypto lender Genesis is reportedly preparing to file for bankruptcy as soon as this week
CoinDesk has hired bankers to explore a potential sale, according to the Wall Street Journal.
The crypto publication broke the story that triggered FTX's solvency crisis in November.
But its owners Digital Currency Group have been caught up in the liquidity crunch plaguing the crypto sector.
CoinDesk is exploring a potential sale after its owner Digital Currency Group was rocked by the turmoil in crypto markets in the wake of crypto exchange FTX's implosion, according to media reports.
The crypto-focused news site has hired $274 billion asset manager Lazard to advise it on a sale that would carve it out from CEO Barry Silbert's under-fire DCG, the Wall Street Journal first reported Wednesday.
Crypto conglomerate DCG is scrambling to resolve financial troubles caused by a liquidity crisis. It got caught up in the fallout from the collapse of Sam Bankman-Fried's FTX and of defunct cryptocurrency hedge fund Three Arrows Capital.
Its lending arm Genesis has cut 30% of its staff and is now reportedly preparing to file for bankruptcy this week as it struggles to pay back a $3 billion debt.
On November 2, CoinDesk was the first publication to report that FTX's sister trading firm Alameda Research held significant amounts of FTX's own native FTT token.
Rival exchange Binance responded by selling all its FTT holdings, triggering a solvency crisis that led to FTX filing for bankruptcy just nine days later.
US prosecutors alleged in December that FTX's now-disgraced founder Bankman-Fried knowingly funneled trading customers' money onto Alameda's balance sheet. That led to his arrest in the Bahamas and extradition to the US to face eight counts of fraud.
As well as CoinDesk and Genesis, DCG owns the crypto mining firm Foundry Digital, the asset manager Grayscale Investments, and the investing app Luno.
CoinDesk and DCG didn't immediately respond to Insider requests for comment.
Read more: Crypto lender Genesis is reportedly preparing to file for bankruptcy as soon as this week
Crypto News Outlet CoinDesk Reported So Hard It May Need to Sell Its Site
Kyle Barr
Thu, January 19, 2023
The CoinDesk logo behind a phone also showing the coindesk logo.
CoinDesk is reportedly mulling over a potential sale as its parent company Digital Commodities Group suffers the results of the FTX fallout, which was ironically first revealed by CoinDesk.
The folks at CoinDesk were simply too good at their jobs. The crypto news site was the first to poke holes in Sam Bankman-Fried’s crypto sandcastle that was FTX, but now the company who owns the crypto news site is reportedly exploring a sale partially due to fallout from Bankman-Fried’s failed and allegedly fraudulent enterprise.
The Wall Street Journal first reported late Wednesday that CoinDesk and its parent company Digital Currency Group are considering putting the company up for sale. Specifically, the report notes that CoinDesk has retained the investment banking firm Lazard to help it explore a partial or full sale of its company.
Gizmodo reached out to CoinDesk for comment but attorneys representing the company did not immediately respond. CoinDesk CEO Kevin Worth confirmed to the Journal that his site has received multiple “indications” of interest. DCG also did not immediately respond to a request for comment.
WSJ wrote based on unnamed sources familiar with internal discussions that DCG has received unsolicited offers for the entire company for more than $200 million just in the last few months. This is even though DCG bought CoinDesk for $500,000 back in 2016, according to those same unnamed sources. CoinDesk made about $50 million in revenue last year.
But reporting from the folks at CoinDesk has been integral to revealing the full scale of alleged fraud occurring at one of the world biggest crypto enterprises. Back in November, CoinDesk’s own Ian Allison first reported based on internal documents that Alameda Research, which was Bankman-Fried’s hedge fund, relied heavily on the FTX exchange’s native FTT token. This was the first domino to fall in what would become an entirely new crypto calamity showing the FTX founder had been taking user’s funds out of his exchange and was funneling them into Alameda. Bankman-Fried is now awaiting a federal trial over eight charges of fraud and conspiracy.
These events have created another crisis for the crypto industry at large, including at DCG. It has also impacted sites that cover tech and crypto. CoinDesk leadership told The New York Times that their reporters are covering DCG like any other crypto entity. Other sites like the fledgling news outlet Semafor have talked up selling investments Bankman-Fried and FTX made with the company.
DCG was once a $10 billion crypto-minded enterprise headlined by major crypto investor Barry Silbert. The company owns several notable crypto-related companies other than CoinDesk, including Grayscale Investments, an investment management company and manager of the Grayscale Bitcoin Trust, as well as the bitcoin mining company Foundry Digital. The trust’s value has plummeted 51% in the past year, and its assets have gone from over $40 billion in 2021 to around 13.1 billion, according to Grayscale’s own metrics.
The group also owns the crypto lender Genesis, which had to shut down redemptions and loans citing FTX’s collapse. The lender admitted back in November that it had $175 million in locked funds on FTX.
Genesis was recently cited by the Securities and Exchange Commission for allegedly selling unregistered securities through its Genesis Earn Lending Program. Since the start of 2023, the lender cut 30% of its staff in the second round of layoffs in less than a year. The company is also reportedly considering bankruptcy.
So yeah, things have not gone swimmingly for DCG’s properties, but CoinDesk is a big reason for why that is. It’s a shame that the people responsible for showing just how rocky the entire crypto industry was—and continues to be—now also have their jobs at risk.
Gizmodo
Kyle Barr
Thu, January 19, 2023
The CoinDesk logo behind a phone also showing the coindesk logo.
CoinDesk is reportedly mulling over a potential sale as its parent company Digital Commodities Group suffers the results of the FTX fallout, which was ironically first revealed by CoinDesk.
The folks at CoinDesk were simply too good at their jobs. The crypto news site was the first to poke holes in Sam Bankman-Fried’s crypto sandcastle that was FTX, but now the company who owns the crypto news site is reportedly exploring a sale partially due to fallout from Bankman-Fried’s failed and allegedly fraudulent enterprise.
The Wall Street Journal first reported late Wednesday that CoinDesk and its parent company Digital Currency Group are considering putting the company up for sale. Specifically, the report notes that CoinDesk has retained the investment banking firm Lazard to help it explore a partial or full sale of its company.
Gizmodo reached out to CoinDesk for comment but attorneys representing the company did not immediately respond. CoinDesk CEO Kevin Worth confirmed to the Journal that his site has received multiple “indications” of interest. DCG also did not immediately respond to a request for comment.
WSJ wrote based on unnamed sources familiar with internal discussions that DCG has received unsolicited offers for the entire company for more than $200 million just in the last few months. This is even though DCG bought CoinDesk for $500,000 back in 2016, according to those same unnamed sources. CoinDesk made about $50 million in revenue last year.
But reporting from the folks at CoinDesk has been integral to revealing the full scale of alleged fraud occurring at one of the world biggest crypto enterprises. Back in November, CoinDesk’s own Ian Allison first reported based on internal documents that Alameda Research, which was Bankman-Fried’s hedge fund, relied heavily on the FTX exchange’s native FTT token. This was the first domino to fall in what would become an entirely new crypto calamity showing the FTX founder had been taking user’s funds out of his exchange and was funneling them into Alameda. Bankman-Fried is now awaiting a federal trial over eight charges of fraud and conspiracy.
These events have created another crisis for the crypto industry at large, including at DCG. It has also impacted sites that cover tech and crypto. CoinDesk leadership told The New York Times that their reporters are covering DCG like any other crypto entity. Other sites like the fledgling news outlet Semafor have talked up selling investments Bankman-Fried and FTX made with the company.
DCG was once a $10 billion crypto-minded enterprise headlined by major crypto investor Barry Silbert. The company owns several notable crypto-related companies other than CoinDesk, including Grayscale Investments, an investment management company and manager of the Grayscale Bitcoin Trust, as well as the bitcoin mining company Foundry Digital. The trust’s value has plummeted 51% in the past year, and its assets have gone from over $40 billion in 2021 to around 13.1 billion, according to Grayscale’s own metrics.
The group also owns the crypto lender Genesis, which had to shut down redemptions and loans citing FTX’s collapse. The lender admitted back in November that it had $175 million in locked funds on FTX.
Genesis was recently cited by the Securities and Exchange Commission for allegedly selling unregistered securities through its Genesis Earn Lending Program. Since the start of 2023, the lender cut 30% of its staff in the second round of layoffs in less than a year. The company is also reportedly considering bankruptcy.
So yeah, things have not gone swimmingly for DCG’s properties, but CoinDesk is a big reason for why that is. It’s a shame that the people responsible for showing just how rocky the entire crypto industry was—and continues to be—now also have their jobs at risk.
Gizmodo
DCG's crypto-lending subsidiary Genesis files for Chapter 11 bankruptcy
Jacquelyn Melinek
Thu, January 19, 2023
Genesis Global Trading, a subsidiary of the crypto conglomerate Digital Currency Group (DCG), filed for Chapter 11 bankruptcy in the Southern District of New York (SDNY) court late Thursday night.
Genesis Global Holdco and two of its lending business subsidiaries, Genesis Global Capital and Genesis Asia Pacific, filed voluntary petitions under the bankruptcy code for SDNY, its press release stated. “Genesis’s other subsidiaries involved in the derivatives and spot trading and custody businesses and Genesis Global Trading are not included in the filing and continue client trading operations,” it added.
Genesis stated it has over $150 million in cash, which it plans to use as liquidity to support its ongoing operations and facilitate its restructuring process.
As part of its filing, Genesis plans to consider a “dual track process” for sale, capital raise or equitization transaction that would potentially allow the business to “emerge under new ownership,” the release said.
The filing followed a series of attempts from Genesis to stay afloat.
The firm struggled to raise capital for its lending unit, cut 30% of its staff in early January and took a financial hit from major catastrophic crypto events last year like the collapse of crypto hedge fund Three Arrows Capital and the decline of crypto exchange FTX.
Genesis had a trading and lending relationship with both Three Arrows Capital and Alameda, FTX’s sister company, DCG’s CEO Barry Silbert shared in a letter from January 10.
“While we have made significant progress refining our business plans to remedy liquidity issues caused by the recent extraordinary challenges in our industry, including the default of Three Arrows Capital and the bankruptcy of FTX, an in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all Genesis stakeholders,” Derar Islim, interim CEO of Genesis, said in a statement on Thursday.
In mid-November 2022, Genesis halted withdrawals and new loan originations and later that month the firm warned of a possible bankruptcy filing as creditors looked for alternative options to prevent it. Around that time, a Genesis spokesperson told TechCrunch, “We have no plans to file bankruptcy imminently.” The spokespersson added, “Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”
Aside from Genesis, DCG is the parent company of digital currency asset manager Grayscale, media company CoinDesk, mining and staking company Foundry, digital asset exchange and wallet Luno and API-centric platform TradeBlock. Silbert said in the mid-January letter that Genesis is a “separate and distinct operating subsidiary” from DCG.
On January 12, the U.S. Securities and Exchange Commission charged Genesis and cryptocurrency exchange, wallet and custodian Gemini for the unregistered offer and sale of securities to retail investors through Gemini Earn crypto asset lending program. The prosecutors said Genesis and Gemini raised billions of dollars’ worth of crypto assets from hundreds of thousands of investors.
“In November 2022, Genesis announced that it would not allow its Gemini Earn investors to withdraw their crypto assets because Genesis lacked sufficient liquid assets to meet withdrawal requests following volatility in the crypto asset market,” the SEC release stated. “At the time, Genesis held approximately $900 million in investor assets from 340,000 Gemini Earn investors. Gemini terminated the Gemini Earn program earlier this month. As of today, the Gemini Earn retail investors have still not been able to withdraw their crypto assets.”
Jacquelyn Melinek
Thu, January 19, 2023
Genesis Global Trading, a subsidiary of the crypto conglomerate Digital Currency Group (DCG), filed for Chapter 11 bankruptcy in the Southern District of New York (SDNY) court late Thursday night.
Genesis Global Holdco and two of its lending business subsidiaries, Genesis Global Capital and Genesis Asia Pacific, filed voluntary petitions under the bankruptcy code for SDNY, its press release stated. “Genesis’s other subsidiaries involved in the derivatives and spot trading and custody businesses and Genesis Global Trading are not included in the filing and continue client trading operations,” it added.
Genesis stated it has over $150 million in cash, which it plans to use as liquidity to support its ongoing operations and facilitate its restructuring process.
As part of its filing, Genesis plans to consider a “dual track process” for sale, capital raise or equitization transaction that would potentially allow the business to “emerge under new ownership,” the release said.
The filing followed a series of attempts from Genesis to stay afloat.
The firm struggled to raise capital for its lending unit, cut 30% of its staff in early January and took a financial hit from major catastrophic crypto events last year like the collapse of crypto hedge fund Three Arrows Capital and the decline of crypto exchange FTX.
Genesis had a trading and lending relationship with both Three Arrows Capital and Alameda, FTX’s sister company, DCG’s CEO Barry Silbert shared in a letter from January 10.
“While we have made significant progress refining our business plans to remedy liquidity issues caused by the recent extraordinary challenges in our industry, including the default of Three Arrows Capital and the bankruptcy of FTX, an in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all Genesis stakeholders,” Derar Islim, interim CEO of Genesis, said in a statement on Thursday.
In mid-November 2022, Genesis halted withdrawals and new loan originations and later that month the firm warned of a possible bankruptcy filing as creditors looked for alternative options to prevent it. Around that time, a Genesis spokesperson told TechCrunch, “We have no plans to file bankruptcy imminently.” The spokespersson added, “Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”
Aside from Genesis, DCG is the parent company of digital currency asset manager Grayscale, media company CoinDesk, mining and staking company Foundry, digital asset exchange and wallet Luno and API-centric platform TradeBlock. Silbert said in the mid-January letter that Genesis is a “separate and distinct operating subsidiary” from DCG.
On January 12, the U.S. Securities and Exchange Commission charged Genesis and cryptocurrency exchange, wallet and custodian Gemini for the unregistered offer and sale of securities to retail investors through Gemini Earn crypto asset lending program. The prosecutors said Genesis and Gemini raised billions of dollars’ worth of crypto assets from hundreds of thousands of investors.
“In November 2022, Genesis announced that it would not allow its Gemini Earn investors to withdraw their crypto assets because Genesis lacked sufficient liquid assets to meet withdrawal requests following volatility in the crypto asset market,” the SEC release stated. “At the time, Genesis held approximately $900 million in investor assets from 340,000 Gemini Earn investors. Gemini terminated the Gemini Earn program earlier this month. As of today, the Gemini Earn retail investors have still not been able to withdraw their crypto assets.”
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