Ex-Genesis executives claimed they were raising money for crypto hedge funds
Just weeks before crypto lender Genesis filed for bankruptcy, three former employees of the company claimed to have secured millions of dollars for a new crypto hedge fund, according to correspondence seen by CNBC.
Matt Ballensweig, who left Genesis in September after more than five years at the firm, sent a message to a potential investor in mid-December about a fund he started called Hunting Hill Digital. Ballensweig said he had already secured $2.5 million from Bessemer Venture Partners at a $30 million post-money valuation, and wrote in the filing that he and his partners were in the process of raising another $5 million.
Bessemer told CNBC in an email that it is not an investor in Hunting Hill Digital.
The fund’s “flagship product” will go into operation in the first quarter of 2023, the announcement states.
Other partners in the fund will include Martin Garcia, who spent more than six years at Genesis, and Reed Werbitt, Genesis’ former head of trading, the release said. Werbitt left Genesis in 2022. and Garcia left the year before.
Genesis, which is owned by Barry Silbert’s Digital Currency Group, filed for bankruptcy protection on Thursday, the latest casualty in the industry contagion caused by the collapse of crypto exchange FTX in November. In its bankruptcy filing, Genesis listed over 100,000 creditors, with total liabilities ranging from $1.2 billion to $11 billion.
Ballensweig was named in legal documents surrounding the implosion of Genesis’ loan book. Gemini, a crypto exchange and a major Genesis client, accused Ballensweig of falsely assuring Gemini in July that Genesis was financially stable. Gemini claimed that Ballensweig told his representatives that Genesis had “the capital to operate … for the long term,” according to court documents.
Ballensweig did not respond to a request for comment on the allegations against him by Gemini or on his recent capital raising.
Ballensweig spent his last nine months at Genesis as managing director and co-head of trading and lending.
The former Genesis employees teamed up with Adam Guren of hedge fund Hunting Hill, Ballensweig said. Hunting Hill is a $718 million hedge fund that launched in 2010 and moved into digital asset investing in 2020 with a crypto opportunity fund.
Hunting Hill did not immediately respond to a request for comment.
Ballensweig pitched the flagship as an “alpha-multistrat (delta-neutral),” or a fund that specializes in multi-strategy, low-risk, high-return investments. He added that the trio would also launch two other beta products, including a “Top 25 Index” and a “DeFi beta.”
“Think you would be a valuable early partner,” Ballensweig said in his pitch.
Ballensweig is not the only Genesis alum who wants to start a fund. Roshun Patel, a former vice president at Genesis who left the company in March after nearly four years, raised money for a new fund in mid-2022. CNBC reached out to Garcia, Werbitt and Patel for comment on their raises, but did not immediately hear back .
Correction: An earlier version of this story had the wrong year for Garcia’s departure from Genesis.
SEE: Cryptolender Genesis files for bankruptcy
