Crypto lending platform Genesis files for bankruptcy

Popular cryptocurrency broker Genesis has filed for Chapter 11 bankruptcy following the meltdown of the FTX exchange, media reports said.

According to bankruptcy documents, the company listed over 1,00,000 creditors in a “mega” bankruptcy filing, with aggregate liabilities ranging from $1.2 billion to $11 billion, reports CNBC.

Genesis is part of the US-based venture capital firm Digital Currency Group (DCG), which also owns cryptocurrency asset manager Greyscale and crypto-focused news outlet CoinDesk.

“We look forward to advancing our dialogue with DCG and our creditors’ advisors as we seek to implement a path to maximise value and provide the best opportunity for our business to emerge well-positioned for the future,” Genesis interim CEO Derar Islim was quoted as saying.

Genesis filed for bankruptcy protection just days after the US Securities and Exchange Commission (SEC) sued Genesis and its one-time partner, Gemini, for offering and selling securities without registering, according to the report.

The crypto platform listed a $765.9 million loan payable from Gemini in the bankruptcy filing.

Another significant claim included a $78 million loan payable from Donut, a high-yield, decentralised platform, and a VanEck fund, with a $53.1 million loan payable, the report said.

Cameron Winklevoss, co-founder of Gemini, first responded to the news on Twitter, writing that Silbert and DCG “continue to refuse to offer creditors a fair deal”.

“We have been preparing to take direct legal action against Barry, DCG, and others. Sunlight is the best disinfectant,” he added.

A series of bad bets made last year crippled Genesis, leading it to halt withdrawals on November 16 after providing loans to crypto hedge funds and over-the-counter firms.

The US-based firm made crypto loans to Three Arrows Capital (3AC) and Alameda Research, a hedge fund started by Sam Bankman-Fried and closely related to his FTX exchange, the report said.

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