Crypto lender Genesis files for Chapter 11 bankruptcy
The cryptocurrency world as taken another victim, with Genesis having between $1 and $10 billion in liabilities.
The crypto landscape has suffered another tectonic shift as crypto lender Gensis files for a Chapter 11 bankruptcy. This marks another company in the crypto space succumbing to the volatile nature of the industry.
CoinDesk reported on January 19, 2023, that Genesis Global Holdco has filed for Chapter 11 bankruptcy. This is the parent company of cryptocurrency lender Genesis Global Capital. CoinDesk notes that the filing sees Genesis estimate 100,000 creditors and between $1 billion and $10 billion in liabilities.
Genesis Global Holdco’s filing for bankruptcy is one of three, with the other two being the aforementioned Genesis Global Capital and Genesis Asia Pacific. These three operate under the Digital Currency Group umbrella, the owners of CoinDesk.
Just last week, the SEC charged both Genesis and Gemini with selling unregistered securities. As part of the duo’s Earn program, Genesis loaned out Gemini user’s crypto, sent a portion of the profits to Gemini who deducted a fee, and then returned profits back to customers.
Source: GETTY IMAGES via BBC
These bankruptcies and SEC charges are part of a string of events that have shaken the cryptocurrency industry. One of the largest markets, FTX, filed for bankruptcy back in November 2022 and its former co-founder was charged with fraud, conspiracy, and money laundering. Crypto.com has since laid off 20 percent of its employees, citing FTX’s collapse as a contributing factor.
There are a lot of industries that seem to intersect in this new realm of blockchain technology. Immutable, known for its Web3 development, has seemingly sidestepped these problems thanks in part to its business strategy. The company’s co-founder, Robbie Ferguson, notes that they exist not to “run a crypto hedge fund” but to “change digital ownership.”
It’s certainly an interesting time in the crypto space. Do you think we’re looking at something similar to the dot-com bubble or is this just a bump in the road? It can be tough to say, especially with companies like GameStop venturing into the space with its NFT Marketplace and Microsoft investing in Korean Web3 and blockchain developer WeMade.
The good news is that, despite Genesis’ filing for bankruptcy, the company anticipates there will be funds remaining to pay unsecured creditors. However, this filing and the recent events certainly paint a bleak picture for crypto.
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