Crypto broker Genesis is said to owe $900 million to clients of Crypto exchange Gemini. Genesis Global Trading crypto broker is said to owe its creditors over $3 billion, according to a January 12 report from the Financial Times. Its parent, the Digital Currency Group (DCG), which also owns Grayscale Investments and its multiple digital asset trusts, aims to sell part of its venture capital holdings to offset the huge shortfall.
Based on people familiar with the matter, DCG’s venture arm has over 200 crypto-related projects “such as exchanges, banks and custodians in at least 35 countries,” with a cumulative valuation of nearly $500 million.
Genesis allegedly hired investment bank Moelis to explore all strategic alternatives, although people familiar with this matter stated that there was little capital infusion interest. On January 5, Genesis confirmed that it laid off 30% of its staff as a cost-cutting strategy, a Second of its kind in only six months.
On January 12, 2023, DCG chief Barry Silbert wrote to shareholders that “bad actors and the implosion of leading crypto companies had wreaked havoc on the industry.” Silbert also revealed that Three Arrows Capital still owes Genesis $447.5 million and 4,550 Bitcoin (BTC) worth $78 million, which is set to mature in May 2023.
Three Arrows Capital is now in bankruptcy proceedings and creditors have already expressed lots of frustration towards the process. On November 16, 2022, reports emerged that Genesis suspended withdrawals citing “unprecedented market turmoil.” At the time, the firm allegedly had $175 million worth of funds stuck on FTX and had already got a $140 million equity infusion to cover some of the losses.
Buy Bitcoin NowIn the past, it was believed that Genesis Global had an estimated shortfall of around $1 billion. Based on a statement by Cameron Winklevoss, the co-founder of Gemini crypto exchange, Genesis lent over $2.3 billion to the now-defunct hedge fund Three Arrows Capital, which left it with a $1.2 billion loss when the company collapsed in June 2022.
Earn Update: An Open Letter to the Board of @DCGco pic.twitter.com/eakuFjDZR2
— Cameron Winklevoss (@cameron) January 10, 2023
Gemini stated that it lent more than $900 million worth of client deposits to Genesis as part of its Earn program. Over 340,000 users are directly affected in the wake of the Gemini Earn <> Genesis Global dispute.
