Bloomberg reports that Genesis Global Capital may be insolvent, so the cryptocurrency lending platform may file for bankruptcy in the coming days.
Genesis Global Capital, a subsidiary of cryptocurrency conglomerate Digital Currency Group, could file for bankruptcy as early as this week amid mounting liquidity problems that have cast doubt on its solvency.
According to Bloomberg report, citing people familiar with the matter, Genesis Global Capital has been secretly meeting with various creditor groups to face possible bankruptcy.
The business of Digital Currency Group’s cryptocurrency lending subsidiary has been hit hard by the collapses of fund Three Arrows Capital (3AC) and FTX’s investment arm, Alameda Research.
Genesis Global had large exposures to 3AC and Alameda Research
According to previous reports, Genesis Global's exposure to the failed hedge fund 3AC was several hundred million dollars. The situation was confirmed by Michael Moro, who served as the company's CEO at the time, via his official Twitter account. Although Moro did not reveal what losses the crypto lending company faced due to the collapse and liquidation of this fund, it was learned that Genesis had generated loans to 3AC in the order of $2.400 billion.
Regarding Alameda Research, it was learned that Genesis Global Capital had received significant funding from this company and that it also had around $175 million dollars in blocked funds after the bankruptcy of the FTX exchange.
Although Genesis Global Capital belongs to one of the largest conglomerates in the crypto industry, Its large exposures to two companies currently in bankruptcy aggravated its liquidity problems, negatively impacting their business.
Domino effect from FTX collapse
DCG CEO Barry Silbert said in November that his company had injected a significant amount of resources into Genesis Global to mitigate any impact and strengthen the position of its crypto lending subsidiary.
However, it seems that this injection of capital was not enough, since a few days after Silbert's statements, Genesis halted withdrawals and refunds its investors, which in turn affected the Gemini Earn rewards program, of which Genesis Global is a lending partner.
This situation has also triggered a series of unpleasant events in the crypto industry, with the Winklevoss brothers accusing Genesis Global, DCG and its CEO of having defrauded 340.000 of their investors.
Genesis Global operates a wide range of business lines including cryptocurrency trading, lending, derivatives and custody services.
According to Bloomberg, if the company fails to raise funds by this week, then it is likely to file for bankruptcy protection in the coming days.
Continue reading: Arcane Research: Digital Currency Group could materialize a new crisis in the crypto market
