The final week of January saw the filing of a Chapter 11 bankruptcy by Genesis, a division of the “crypto conglomerate” formed by Barry Silbert. Since FTX’s collapse, Genesis is the most recent cryptocurrency business to do so. The effects of the FTX implosion were also felt by Genesis, despite the fact that it could remain intact for a longer period.
what is Genesis and what was their objective?
Genesis set out to be one of the most “over-the-counter” Bitcoin trading platforms, enabling users to trade large sums of Crypton. Genesis was able to draw millions of customers by touting this, giving them the impression that they could obtain very high profits by depositing their cryptocurrency holdings.
The initial signs of Bankruptcy
Genesis laid off 30% of its staff reducing it to just 145 employees following the suspension of withdrawals in November of 2022. This suspension resulted in over 350,000 users being unable to access their funds. Then after months of uncertainty did they filed for bankruptcy. According to bankruptcy documents, at the time of this filing, the company listed over a hundred thousand creditors with liabilities ranging from $1.2 billion – $11 billion.
The Genesis bankruptcy was also affected by the collapse of the ‘Three Arrows Capital’ crypto firm which went bankrupt last year June. Genesis claimed that the firm that was destroyed by the failure of Luna and TerraUSD in May owed them $1.2 billion. 1
What happened at the beginning of 2023 and why they declared bankruptcy?
In January Genesis was accused of selling unregistered securities in a joint venture with Gemini by the Securities and Exchange Commission. According to Gary Gensler, chair of the SEC, Genesis and Gemini had disregarded “disclosure standards designed to protect investors.” The Winklevosses have accused DCG, the parent company of Genesis, of holding back money that should have belonged to its clients. 2
In order to create the impression that Genesis was in a better state than it actually was, they also asserted that DCG and Genesis had falsified financial data and mischaracterized the value of the company.
As we can see this bankruptcy filing is just another side effect of the FTX crash as its effects are still being felt.
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