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Genesis, a Crypto Lending Company, Files for Bankruptcy

Genesis, a Crypto Lending Company, Files for Bankruptcy

Genesis, a Crypto Lending Company, Files for Bankruptcy

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Cryptocurrency lender Genesis Global Holdco filed for bankruptcy late Thursday, the latest crypto company to do so after the collapse of FTX, the exchange founded by Sam Bankman-Fried.

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A year ago, Genesis and a group of other major lending companies lured millions of customers with the promise that they could deposit their crypto holdings and earn exorbitant returns. But Genesis’s bankruptcy filing makes it the fourth major crypto lender to fail since last spring, when a downturn in the digital asset market sent prices plummeting. Other big lenders that have gone out of business include Celsius Network and Voyager Digital, whose customers have lost billions of dollars in deposits.

Genesis survived longer, but suffered from the fallout of the FTX implosion. In November, Genesis said it was freezing withdrawals, citing “market turmoil” caused by the bankruptcy of Mr. Bankman-Fried’s business.

The filing in the bankruptcy court for the Southern District of New York involved three entities: Genesis Global Holdco and two of its subsidiaries, Genesis Global Capital and Genesis Asia Pacific.

Genesis is a subsidiary of Digital Currency Group, the crypto conglomerate founded by Barry Silbert in 2015. Mr. Silbert’s leadership and problems at Genesis have recently brought him into conflict with two other top crypto executives, Cameron and Tyler Winklevoss, who run the Gemini exchange.

Last week, the Securities and Exchange Commission accused Genesis of offering unregistered securities in a partnership with Gemini. SEC Chairman Gary Gensler said at the time that Genesis and Gemini circumvented “disclosure requirements designed to protect investors.”

The Winklevosses have publicly accused Genesis’ parent company, DCG, stall to keep funds that belong to its customers. They also claimed that DCG and Genesis misrepresented financial information and misrepresented the value of company assets to make Genesis appear healthier than it was.

The SEC charges against Genesis and Gemini were part of a broader crackdown on crypto lenders. In February, the agency announced $100 million in penalties on BlockFi, a crypto lender. BlockFi filed for bankruptcy in November, making it one of the first big casualties of FTX’s collapse.

Earlier on Thursday, the SEC announced a $45 million settlement with another crypto lending company, Nexo, for violating securities law.

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