Genesis Global Capital, a leading lender in the cryptocurrency space, is reportedly on the brink of filing for bankruptcy, according to an article by Bloomberg on Wednesday.
On November 16th, Genesis began to show the first signs trouble could be on the horizon, after it suspended redemptions for its customers. This came shortly after FTX’s spectacular implosion, which caused chaos across the crypto industry.
Several other companies in the industry have also struggled, including BlockFi, another well-known and widely used crypto lender, which declared insolvency shortly after FTX’s collapse.
According to a Bloomberg report, discussions between Genesis, Digital Currency Group, and creditors have failed to produce a resolution thus far. The report also noted that law firms Kirkland & Ellis and Proskauer Rose have been assisting the creditor groups. The report added that a potential bankruptcy filing is being prepared by Genesis and could occur as soon as this week.
Gemini vs Genesis
The situation is further complicated by a dispute between Genesis and Gemini, a company created by the Winklevoss twins. Gemini claims that Genesis owes them $900 million in relation to a crypto lending product called “Earn” that the two firms had collaborated on.
As we reported earlier this week, the SEC charged Genesis and Gemini for providing investors, including retail investors, with unregistered securities through their crypto-lending program.
It remains to be seen how this bankruptcy may affect the cryptocurrency markets, which have just recently recovered from November’s FTX catastrophe. Do you think further bankruptcies have been priced in, or will they cause further turmoil in the markets?