The Genesis Group, a subsidiary of Digital Currency, underwent substantial losses in 2022 following the downfall of the crypto hedge fund Three Arrows Capital. With their ties to FTX, which declared bankruptcy last November, the situation was further compounded as they had also provided liquidity to Alameda Research and other crypto companies connected with FTX. After its collapse, Genesis faced difficulties disbursing payments which mainly affected its credit division; customer withdrawals and new lending were both put on hold due to this setback.
Genesis Filed for Bankruptcy
Recently, Digital Currency Global attempted to reduce expenses. An inside source disclosed that the DCG subsidiary Genesis fired thirty percent of its personnel. On top of this, Barry Silbert announced the closure of its asset management division’s headquarters. Nevertheless, it could not protect against crypto winter, and a few days ago, Genesis filed for bankruptcy as another casualty.
“We have taken steps to address the liquidity issues caused by recent industry challenges, such as Three Arrows Capital and FTX entering insolvency. However, a court restructuring is the most effective way of preserving assets and achieving optimal results for everyone involved with Genesis,” said Derar Islam, interim CEO of Genesis.
Genesis has more than a hefty $150 million in cash, granting it fair liquidity to continue operations and navigate the restructuring process, as mentioned in its press release.
Genesis Trading Arm Is Still Active
Genesis Global Holdco, LLC and its two lending affiliates, Genesis Global Capital, LLC, and Genesis Asia Pacific Pte. Ltd have all filed voluntary petitions for Chapter 11 of the US Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. However, customers must not worry because other subsidiaries involved with derivatives trading, spot trading, and custody businesses, such as Genesis Global Trading, were excluded from this filing; these services will continue without disruption. It appears that Genesis crypto trading arm is still able to conduct business on blockchains, indicating operations are running in a relatively normal fashion. This news was reported by CoinDesk – Digital Currency Group’s subsidiary – confirming the speculation.
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