Reports Coming Into Claim Genesis Plans On Filing Bankruptcy

The cryptocurrency industry has to brace itself for another concerning and grieving update from within the crypto market.

The reports are coming in that Genesis Global Capital is considering the option of going bankrupt. There are claims that the cryptocurrency lending platform may go bankrupt in the running week.

It is another major upset for the cryptocurrency industry I finally felt that the trauma from the year 2022 was over.

Genesis Global Capital is part of the Digital Currency Group (DCG), which is a major cryptocurrency conglomerate. The lending firm acts as the subsidiary of the DCG.

Bankruptcy Hinted by Genesis

The concerns were raised after the officials at Genesis posted a statement on January 18. They posted that they had been finding it extremely difficult to deal with the liquidity crunch.

The problem arose for the platform ever since the FTX crash happened. The FTX exchange also went down because of the liquidity crunch that had plagued the platform.

The spread was so fast that FTX filed for bankruptcy a few days after the revelations that the exchange was actually facing a downfall.

Just like the FTX exchange, Genesis reports that it is facing a liquidity crunch. As the market trends are also moving downwards, the situation does not seem to be falling in favor of Genesis any time soon.

While giving the reasons, Genesis has pointed out that they have been trying their best to raise cash but have failed to do so.

If they continue facing the same problem, then they will have no option but to go with filing for bankruptcy. The sources familiar with the matter are claiming that Genesis may file for bankruptcy as soon as the running week.

US SEC Files Lawsuit against Genesis

The reports of Genesis going bankrupt come in just a few days after the US Securities and Exchange Commission (SEC) made an allegation against the firm.

The US SEC issued a statement on January 12, revealing that the platform was involved in offering unregistered securities to the US locals.

The US SEC’s case was filed not only against Genesis but also against a major cryptocurrency exchange, Gemini.

The regulator claimed that it was the Earn Program by Gemini that was responsible for selling unregistered securities to the users.

The Gemini exchange let its users offer their assets as loan to Genesis as part of the program. Therefore, Genesis has been dragged into the lawsuit as well.

The situation has now become much more complicated because the co-founder of the Gemini exchange, Cameron Winklevoss is going against the DCG.

As per Winklevoss, the Genesis protocol owes a tremendous amount of funds to the Gemini exchange as part of the program.

According to an estimation shared by Cameron Winklevoss, Genesis owes $900 million to the Gemini exchange. He is demanding that DCG, which is the parent company of Genesis, must take care of this matter.

On the other hand, the DCG claims that the allegations made by Winklevoss are baseless and malicious.

It is just a defamation attack made by Cameron Winklevoss who is using fake and false claims to spoil the brand’s name and reputation.

Many Firms have Bitten the Dust

Genesis is not the only firm, which ended up getting feasted upon by the market conditions and the liquidity crunch.

Several other firms have faced a similar situation and they are no longer operating because they have filed for bankruptcy.

One of the largest names in the cryptocurrency industry, Three Arrows Capital (3AC), was the first one to file for bankruptcy due to the market crunch.

Genesis had $447.5 million worth of its funds stored at 3AC, which it ended up losing as the latter is yet to come up with the funds.

Genesis also had $175 million stored at the FTX exchange and that platform also ended up filing for bankruptcy. This makes things even worse for the Genesis protocol.

Other firms that have faced major collapses include BlockFi, Celsius Network, Voyager Digital, Terraform Labs, and many more.