In the wake of FTX, giant Genesis could file for bankruptcy this week. This would shake the price of bitcoin, which has experienced a period of calm in recent days.
Despite the relative lull in the crypto market, with bitcoin above $20,000, the ecosystem is holding its breath. In fact, a great actor would count his days. Crypto lending platform Genesis, weakened by FTX’s fall, could go bankrupt this week, reveals Bloomberg and other specialized media. However, such an event could again weaken the cryptocurrency market, said Vincent Boy, technical analyst at IG, during a press briefing. In addition to dealing another blow to the crypto ecosystem, the bankruptcy of this new giant could lead to upheavals in other players, especially the crypto giant Gemini or, by extension, the specialized media CoinDesk.
The situation has been worsening for months now for Genesis, first weakened by the collapse of the Terra Luna ecosystem. After laying off 20% of its workforce in August, Genesis shed 30% of its workforce in early January, down to just 145 employees. The real blow came from the bankruptcy last November of FTX, a player that was strategic to Genesis as the company blocked $175 million from the American giant.
Due to a lack of liquidity, Genesis notified its customers on November 16 that they could no longer withdraw their cryptocurrencies from the platform. What was supposed to be “temporary” never returned to normal, internally weakening Genesis and some of its partners and creditors. With no solution found so far, Genesis this week established a “pre-arranged bankruptcy plan” with its main creditors. The latter would agree to a “holding period, for most payments, of one to two years according to the pre-established bankruptcy plan,” state sources of The block and to Bloomberg. In return, they will be able to receive cash payments and shares in Genesis’ parent company, Digital Currency Group (DGC).
Tensions between Gemini and Genesis
Among the creditors there are above all the Winklevoss brothers, the founders of the crypto exchange platform Gemini, who still manage almost cryptocurrency for 30 billion dollars. However, the tension has gone up a notch between Gemini and Genesis. In fact, since 2020, the two companies have been partners in the “Gemini Earn” program, which allowed Gemini customers to earn up to 8% interest by lending their cryptocurrencies to Genesis. However, on November 16, Genesis suspended lenders’ ability to withdraw their cryptocurrencies. Today, Genesis has $900 million from Gemini’s 340,000 lenders. Funds that Gemini claims today.
By asking Genesis for this $900 million in a letter posted on Twitter in early January, Cameron Winklevoss caught the eye of the US stock market policeman, the SEC. Outcome: The SEC decided to prosecute the two companies considering that the “Gemini Earn” program should have been registered with the competent authorities to protect investors.
Things don’t stop there for Genesis. According to a letter to shareholders dated Monday and seen by Bloomberg, DGC announced that it was “suspending its quarterly dividend to conserve cash”. A decision that puts the specialized media in difficulties CoinDesk, known for first revealing the close ties between Alameda Research and FTX. Genesis’ parent company, DGC, had actually bought CoinDesk in 2015 for about $600,000. To date, the media outlet, which has hired the Lazard firm as a financial adviser, is exploring a “total or partial sale”, its boss Kevin Worth told AFP. The block.