Genesis Global Holdco, a cryptocurrency lender, declared bankruptcy late Thursday, becoming the second crypto company to do so following the collapse of FTX, the exchange founded by Sam Bankman-Fried.
Genesis and a clutch of other huge loan firms enticed millions of customers a year ago with the promise of depositing their crypto holdings and earning sky-high rates. However, Genesis’ bankruptcy filing makes it the fourth big crypto lender to fail since last spring, when the digital asset market saw a dip, sending values down. Celsius Network and Voyager Digital are two more significant lenders that have gone out of business, with consumers losing billions of dollars in deposits.
Genesis survived longer, but suffered as a result of FTX’s demise. In November, the company announced a freeze on withdrawals, claiming “market volatility” induced by Mr. Bankman-bankruptcy. Fried’s
Genesis Global Holdco and two of its subsidiaries, Genesis Global Capital and Genesis Asia Pacific, were included in the firm’s bankruptcy case in the Southern District of New York.
Genesis is a subsidiary of the Digital Currency Group, a cryptocurrency corporation formed in 2015 by Barry Silbert. Mr. Silbert’s management and Genesis’ problems have recently led him into dispute with two other notable cryptocurrency CEOs, Cameron and Tyler Winklevoss, who oversee the exchange Gemini.
The Securities and Exchange Commission charged Genesis last week with marketing unregistered securities in collaboration with Gemini. The SEC’s chair, Gary Gensler, stated at the time that Genesis and Gemini had avoided “disclosure obligations designed to protect investors.”
The Winklevosses have openly accused Genesis’ parent firm, DCG, of stalling in order to keep client funds. They further claim that DCG and Genesis distorted financial information and overstated the value of firm assets in order to give the impression that Genesis was in better shape than it was.
The Securities and Exchange Commission’s allegations against Genesis and Gemini were part of a larger crackdown on cryptocurrency lenders. The SEC fined BlockFi, a cryptocurrency lender, $100 million in February. BlockFi declared bankruptcy in November, becoming one among the first major victims of FTX’s demise.
