Genesis Global Capital To File For Bankruptcy

Crypto Lender Froze Client Assets in November

More than two months after it froze customer assets, Genesis Global Capital is preparing to file for bankruptcy, according to Bloomberg.

Genesis, a subsidiary of crypto conglomerate Digital Currency Group, was once one of the largest crypto lenders. In the fourth quarter of 2021, it originated $50B in loans.

But Genesis was caught off guard by the collapses of crypto hedge fund Three Arrows Capital in June and crypto exchange FTX in November. It is among Three Arrows’ largest creditors, owed more than $1B, according to court records. It also held more than $175M on FTX when the exchange filed for bankruptcy.

Since then, Genesis leadership has explored the possibility of making its own bankruptcy filing, according to news reports. But Wednesday’s was the first to suggest such a filing was imminent.

Genesis is yet to respond to a request for comment from The Defiant.

Genesis is negotiating a prepackaged bankruptcy plan with creditors in which creditors would agree to a one- or two-year forbearance period in exchange for cash payments and DCG equity, The Block reported.

Barry Silbert, a Wall Street veteran and CEO of parent company DCG, is under enormous pressure to find a solution. 

About 34,000 customers of Gemini Earn, a product offered by crypto exchange Gemini, cannot withdraw some $900M entrusted to Genesis. Gemini co-founder Cameron Winklevoss has accused Silbert of fraud.

Winklevoss and Silbert Trade Blows as Fraud Accusations Fly

DCG Boss Rejects Gemini CEO’s Accusations of Accounting Fraud

The Securities and Exchange Commission, meanwhile, has sued Genesis and Gemini, alleging that the Earn product was an unregistered security.

SEC Charges Gemini and Genesis With Selling Unregistered Securities

Agency Targets Gemini’s Earn Product as War of Words Escalates Between Winklevoss and Silbert