The crypto winter has claimed a new victim. The Genesis platform has filed for bankruptcy, after failing to overcome the impact of the FTX crash. Genesis did not take long to announce that its viability was very affected and now, a couple of months later, the news has finally been confirmed.
Genesis and two of its subsidiaries were among the largest lenders in the crypto sector and have hundreds of workers. In their presentation it was estimated that they had between 1,000 and 10,000 million dollars in assets, with more than 100,000 clients. According to the bankruptcy file that they have filed in a Manhattan federal court, Genesis accumulates debts of more than 3,500 million dollars. A financial hole that adds to those that we have already seen these months, such as that of Block Fi.
The cascade of crypto crashes continues. The Genesis bankruptcy is representative of the domino effect in the crypto sector right now. A sector that tries to raise its head, but where there are too many large companies affected by the FTX disaster.
The fall of Genesis also affects Gemini, founded by the well-known Winklevoss twin brothers, famous for their legal battle with Mark Zuckerberg over the creation of Facebook. Gemini had to halt asset withdrawals and is in conflict with Genesis over a loan product they co-offered.
Who takes responsibility. The Winklevoss believe that Genesis owes $900 million to more than 340,000 investors. And all eyes are on Barry Silbert, CEO of Digital Currency Group, the parent company of Genesis. In the words of one of the brothers, Silbert continues to deny a fair deal to all investors left stranded.
A position that can end a lawsuit between the parties, according to CoinDesk. Specialized medium that also belongs under the umbrella of Digital Currency Group.
8/ We also believe that — in addition to owing creditors all of their money back — Genesis, DCG, and Barry owes them an explanation. Bankruptcy court provides a much-needed forum for that to happen. Sunlight is the best disinfectant.
— Cameron Winklevoss (@cameron) January 20, 2023
It is unknown to what extent there will be contagion. It is the great question of this crypto winter. We are facing lenders who have left huge amounts of money to others and many of them cannot pay them. Among Genesis’s largest clients were Three Arrows Capital, a Singaporean crypto investment fund, and Alameda Research, an FTX-affiliated company. Both are also bankrupt and have contributed to the downfall of Genesis.
In turn, Three Arrows Capital collapsed due to being affected by the fall of Luna. The chain effect comes from afar and it is not known how far it will go.
Survivors of the crypto winter. This time, already popularly known as crypto winter, is leaving a trail of bankruptcies, but it can also mean cleaning up those crypto companies that were not viable.
During the last years we have seen hundreds of tokens and projects that have been getting a huge investment. Now it has been seen that many of them were not solid. And at the moment that some have begun to fall, others have followed.
Crypto companies that manage to consolidate and survive this contagion effect can be proud. However, doubts hang over even the largest players in the sector, starting with Binance, the largest crypto exchange. We will have to wait at least a few months to see if the sector is strong enough to get ahead or if all these companies were relying too much on borrowing money from each other.
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