Cryptolender Genesis files for bankruptcy
- By Shiona McCallum and Mike Farrell
- Technology reporters
image source, Getty Images
Cryptocurrency lender Genesis has filed for bankruptcy.
The firm was recently accused by US regulators Securities and Exchange Commission (SEC) of illegally selling crypto.
It is part of the Digital Currency Group (DCG), a conglomerate of more than 200 crypto-focused businesses.
The bankruptcy of Genesis is linked to the bankruptcy of FTX, which collapsed last November amid allegations of fraud.
Genesis had originally been set up as an “over the counter” Bitcoin trading desk, enabling the trading of large amounts of crypto.
Earlier this month, it announced it was laying off 30% of its workforce, reducing it to 145 employees.
“We look forward to advancing our dialogue with DCG and our creditor advisors as we seek to implement a path to maximize value and provide the best opportunity for our business to appear well-positioned for the future,” said Genesis Interim CEO Derar Islim. in a statement.
Repercussions
Genesis had been hit by the collapse of another crypto firm, Three Arrows Capital, which went bankrupt last June.
It is the latest in a series of shocks for the sector, which has been dubbed the “crypto winter” by some analysts, and describes the decline in the value of cryptocurrencies.
Ongoing fallout
Genesis is also embroiled in a high-profile dispute with Gemini, owned by former Olympic rowers Cameron and Tyler Winklevoss, over the fate of $900 million in assets that Gemini customers deposited with the lender.
The product, called Gemini Earn, was sold to investors as a chance to earn as much as 7.4% interest on their cryptocurrency holdings.
About 340,000 Earn users have not been able to access their funds since November, when Genesis stopped withdrawals due to the volatility of crypto markets.
Last week, the SEC accused both Genesis and Gemini of illegally selling crypto assets to investors. The Winklevoss twins said they were looking forward to defending the act, but DCG has so far not commented.
Cameron Winklevoss tweeted shortly after Genesis filed for bankruptcy.
This article contains content provided by Twitter. We ask for your permission before loading anything, as they may use cookies and other technologies. You might want to read Twitter Cookie Policy and privacy statement before you accept. To view this content, select ‘accept and continue’.
End of Twitter content, 1
The bankruptcy filing is another blow as the effects of the FTX collapse are still being felt.
Founder Sam Bankman-Fried is accused of fraud after diverting funds deposited by millions of customers on his FTX platform, transferring them without authorization to Alameda, a hedge fund.
In December, the 30-year-old was extradited from the Bahamas, where FTX was based, back to the United States where he formally pleaded not guilty to charges of defrauding customers and investors.
He was released on $250 million bail, denying the charges.
