During 2022, the crypto lending business known as Genesis experienced losses of hundreds of millions of dollars. The company suffered from these losses due to its exposure to Three Arrows Capital, which is a cryptocurrency hedge fund that was a complete failure. Later in 2022, the collapse of crypto giant FTX and the downfall of Samuel Bankman-Fried happened. That collapse was ultimately the nail in the coffin for Genesis.
Overview
The parent company of Genesis is Genesis Global Holdco LLC. After 2022 was one of the worst years for crypto, the parent company filed for Chapter 11 bankruptcy protection in the state of New York. On top of that, all of the subsidiaries of Genesis Global Holdco also filed voluntary bankruptcy petitions in the United States Bankruptcy Court in the Southern District of New York. Since the parent company of Genesis and all of its subsidiaries fall under the category of Digital Currency Group, the company moved for joint administration for all of the cases.
Money Owed
Court reports show that Genesis owes roughly $ 3.5 billion to its top 50 creditors in 2022. These creditors include some big names such as Cumberland and Crypto exchange Gemini. All 50 of these crediting companies formed the Crypto lending branch of Genesis, which was pummeled in 2022 due to the collapse of Three Arrows Capital, as well as FTX adding salt to the wound in the end.
Filings
In the Bankruptcy filing of Genesis, the company stated that if they undergo a restructuring process, there will ultimately be enough money left over to pay its creditors. That’s a bold statement considering they owe roughly $3.5 billion to their creditors. FTX was also mentioned in the filings, as Genesis stated the collapse of FTX forced them to suspend customer withdrawals, which resulted in customers losing their money.
Wrap Up
As we see another crypto giant fall under, we have to question the stability of the crypto industry overall. With FTX being the first company now followed by Genesis, fear is beginning to set in on the market because it is unknown if this situation will have a domino effect.