The backlash from the FTX disaster continues to claim victims. This time it was the turn of Genesisanother giant in the world of cryptocurrencies that has declared bankruptcy. Something similar to what happened some time ago with BlockFi. In reality, the firms that have filed for Chapter 11 of the United States Bankruptcy Law are three: Genesis Global Holdco and its subsidiaries Genesis Asia Pacific Y Genesis Global Capital. The last two gave life to a crypto lending service that was badly hit after the debacle of the exchange by Sam Bankman-Fried.
It is worth clarifying, however, that not all companies belonging to the genesis group have been hit by bankruptcy. Genesis Global Trading, considered one of the largest “crypto investment banks” in the world, and other subsidiaries dedicated to trading and custody of assets continue to function normally, as reported.
Of the three companies that have filed for bankruptcy, the most committed is Genesis Global Capital. It was in charge of lending the cryptocurrencies of its clients in exchange for an interest rate in favor of the lenders. However, an important part of its assets was exposed to the collapse of FTXwhich prevented users from recovering their funds.
According to bankruptcy documents, Genesis Global Capital estimated its assets and liabilities to be in the range of $1 billion to $10 billion. While its creditors are more than 100,000 and include other important firms in the crypto sector. It is estimated that the company owes more than 3,500 million dollars to its main clientsincluding Gemini, the exchange of the Winklevoss brothers. In the latter case, the debt would be 900 million dollars.
As for Genesis Global Holdco and Genesis Asia Pacific, the situation would be considerably less dramatic. Both companies have reported estimated assets and liabilities between $100 million and $500 million.
Genesis, another crypto empire that collapses after the FTX debacle
Genesis Global Capital’s problems came to light in November last year, just weeks after FTX filed for bankruptcy. By then, she was forced to suspend withdrawals of funds by your customerssince many of its assets were exposed to the instruments of said platform.
But Genesis’s relationship with FTX is much more complicated than you might imagine. It is that the now bankrupt company has not only lost the cryptocurrencies lent by its users, but it is also one of the creditors of the exchange by Sam Bankman-Fried. According to court documents, the Bahamas-based firm owes him more than $226 million.
All this makes it clear that there is still no true dimension of the impact that the FTX implosion has had, nor the scope of its consequences. But most curious of all, this was the second slap that put Genesis Global Capital on the ropes in 2022. In the first half of the year it had lost $2.4 billion on loan to Three Arrows Capital, a hedge fund that collapsed after the UST and Luna scandal.
Nor should we forget that when rumors of a possible Genesis bankruptcy began, the company denied them. Nevertheless, its attempts to raise $1 billion to revive its operations were unsuccessful. Binance and Apollo Global Management were two of the possible lifesavers, but there were no positive responses.
The other curious fact is that the FTX debacle that is impacting Genesis today was unleashed from a journalistic report from CoinDesk. Said news portal belongs to the Digital Currency Group emporiumthe parent company of Genesis Global Holdco and its now bankrupt subsidiaries.