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Genesis lenders could lose between $1 billion and $10 billion in deposits amid the final freeze on payouts. In total, the company served about 100,000 customers.
The cryptocurrency market was shocked by the news of the collapse of one of the leading companies in this industry, Genesis: its credit division has already filed for bankruptcy in the United States.
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According to a Reuters story, Genesis lenders now stand to lose between $1 billion and $10 billion in deposits amid the final freeze on payments. In total, the company served about 100,000 customers.
It is reported that the first problems with payments from Genesis Global Capital began as early as November 16, 2022: then the company decided to temporarily freeze them against the background of the bankruptcy of another leading player in the crypto market – the company FTX.
According to the results of last year, the company provided cryptocurrency loans in the amount of 130.6 billion dollars and sold assets for 116.5 billion dollars. Three Arrows Capital (a Singaporean cryptocurrency hedge fund) and trading company Alameda Research, which is linked to FTX, were among the company’s biggest borrowers. Now they are also on the verge of bankruptcy.
Currently, the company’s parent group – Genesis Global Holdco – has filed for bankruptcy protection. In its statement, the company does not rule out the possibility of settlement with creditors through a capital equalization operation. The company now has about $150 million to initially support the restructuring.
At the same time, the derivatives and spot trading of Genesis, as well as the company’s broker-dealer and depository enterprises are not included in the risk zone: their clients can continue trading operations without fear.
The publication notes that the possible bankruptcy of Genesis will be the last “point” in a series of crypto failures and drastic job cuts in this market. The first unrest in the industry happened against the background of the coronavirus pandemic in 2022.
Bankruptcy of FTX
Earlier, The Wall Street Journal conducted an investigation, in the framework of which it found out about stock exchange manipulations. FTX used its assets to finance the failed operations of its related company, Alameda Research. Already in November 2022, the FTX company declared bankruptcy shortly after a large sale of the FTX – FTT bitcoin token was held on the Binance exchange.
A few hours after the announcement, tokens worth about $372 million were stolen from the crypto exchange. According to research company Nansen, the outflow of tokens amounted to almost 700 million dollars already within a day. Against the background of such news, on December 30, the authorities of the Bahamas seized the assets of a crypto exchange worth more than 3.5 billion dollars due to the risks of the disappearance of these funds and new attacks on the exchange.
