More Crypto Struggles – Crypto Lender Genesis Files for Bankruptcy
Bad news has struck the crypto world once again as New York-based cryptocurrency lender Genesis files for bankruptcy. Genesis has become the next major crypto firm to file for Chapter 11, following suit alongside other giants such as BlockFi, FTX, Voyager, and Celsius. The news comes following the major tolls in the price of cryptocurrencies beginning in late 2021. Genesis is part of a larger conglomerate company known as Digital Currency Group (DCG), which also owns the likes of CoinDesk, Grayscale, Luno, and more. DCG, however, is not a part of the filing and will continue its business, but Genesis is now under legal debt to pay back their parent firm of over $1.6 billion dollars. Customers with holdings under Genesis will be paid back in cash and equity following the firm’s restructuring, which could take upwards of several years.
As FTX just recently filed for bankruptcy in November, several hypothesized their loss would ripple throughout the crypto industry, and in Genesis’ case, it unfortunately did; Genesis had lent several hundreds of millions of dollars to FTX’s affiliate trading firm Alameda Research, which is currently under investigation for defrauding, and potentially laundering, customer’s assets. On a larger note, Genesis had also lent close to $2.4 billion to crypto hedge fund Three Arrows Capital, which filed for bankruptcy last summer. Regardless, Genesis has reported up to $5.1 billion in total liability spread across over 100,000 creditors, which will be hoped to be repaid following their restructuring.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.