Genesis Global Settles With New York AG for $2,000,000,000 in State’s Largest Crypto Settlement Ever

May 20, 2024 The Daily Hodl

FTX seeks to claw back $4B from Genesis in a battle of the bankrupt

May 3, 2023 Coin Telegraph

FTX seeks to claw back B from Genesis in a battle of the bankrupt

Bankruptcy

The bankrupt crypto exchange wants to recoup billions from the bankrupt crypto lender claiming it was “instrumental” to FTX’s “fraudulent” business model.

Cryptocurrency exchange FTX is seeking to recover around $4 billion from similarly bankrupt crypto lender Genesis and a still-solvent British Virgin Islands-based entity — part of efforts to recover value for creditors.

In a May 3 court filing in a New York Bankruptcy Court, lawyers for FTX sought $1.8 billion in loans and a $273 million collateral pledge allegedly given to Genesis from FTX’s sister trading firm Alameda Research.

FTX is also seeking to claw back $1.6 billion in withdrawals allegedly made by Genesis and a further $213 million purported to be withdrawn by its BV-based entity GGC International from the exchange before it collapsed into Chapter 11 bankruptcy on Nov. 11.

FTX moves to claw back $3.9 billion from Genesis.

1. $2.1 billion loan repayments/collateral pledge
2. $1.8 billion FTX exchange withdrawals pic.twitter.com/1SsW8yoPck
— FTX 2.0 shareholder (in spe) (@AFTXcreditor) May 3, 2023

The filing claims Genesis was “largely repaid” its nearly $8 billion in loans made to Alameda, “unlike other FTX creditors and customers.”

FTX alleged the bankrupt lender was “one of the main feeder funds for FTX and instrumental to its fraudulent business model.”

The exchange’s lawyers are seeking the clawback under bankruptcy laws that allow it to recoup “avoidable transfers” that occur in a 90-day period before a company declares bankruptcy.

Previous clawbacks by FTX have focused on $3.2 billion in payments made to its former executives, a $460 million investment made by Alameda into venture capital firm Modulo Capital and around $93 million in political donations made by founder Sam Bankman-Fried and other former top brass.

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Crypto lender Genesis files for Chapter 11 bankruptcy

January 20, 2023 Coin Telegraph

Bankruptcy

Crypto lender Genesis Global has become the latest firm to throw in the towel following the collapse of FTX, filing for Chapter 11 bankruptcy protection in New York.

Cryptocurrency lender Genesis has filed for Chapter 11 bankruptcy in the Southern District of New York.

The firm has estimated liabilities of $1 billion to $10 billion and assets in the same range, according to the Jan. 19 filing.

Earlier reports claimed the company had been considering filing for bankruptcy protection if it was unable to raise capital to stem its liquidity crisis.

In a Jan. 19 press release, Genesis said it had been engaged in discussions with its advisors "to its creditors and corporate parent Digital Currency Group (DCG) to evaluate the most effective path to preserve assets and move the business forward.”

“Genesis has now commenced a court-supervised restructuring process to further advance these discussions.”

The company’s Chapter 11 plan sees it contemplating a “dual track process” pursuing a “sale, capital raise, and/or an equitization transaction" that would apparently enable the business "to emerge under new ownership.”

The derivatives, spot trading, broker-dealer and custody businesses of Genesis are not part of the Chapter 11 proceedings and will continue operations according to the firm.

It also claimed to have more than $150 million in cash on hand that it believes "will provide ample liquidity to support its ongoing business operations and facilitate the restructuring process."

The restructuring process will be led by an "independent special committee" of the company's board of directors, and Genesis says the process is aimed at providing "an optimal outcome for Genesis clients and Gemini Earn users."

The firm suspended withdrawals from its platform in November 2022 amid market turbulence caused by the collapse of FTX. The move impacted users of Gemini Earn, a yield-bearing product for users of the Gemini cryptocurrency exchange managed by Genesis.

Gemini co-founder Cameron Winklevoss tweeted the bankruptcy is a "crucial step" toward Gemini users being able to recover their assets but claimed DCG and its CEO Barry Silbert "continue to refuse to offer creditors a fair deal" and threatened to file a lawsuit "unless Barry and DCG come to their senses."

6/ Unless Barry and DCG come to their senses and make a fair offer to creditors, we will be filing a lawsuit against Barry and DCG imminently.
— Cameron Winklevoss (@cameron) January 20, 2023

Both Genesis and Gemini are facing charges from the United States Securities and Exchange Commission (SEC) for allegedly offering unregistered securities through the Earn program.

Fears are mounting over Genesis' parent company DCG as it may have to sell part of its $500 million venture capital portfolio to try to offset Genesis' liabilities.

On Jan. 17, DCG halted dividend payments in a move aimed at "reducing operating expenses and preserving liquidity.” The sale of its crypto media outlet CoinDesk is also reportedly being weighed which could net DCG $200 million.

Gemini and Genesis charged by SEC over unregistered securities

January 12, 2023 Coin Telegraph

Breaking: Crypto lender Genesis Global halts withdrawals

November 16, 2022 Coin Telegraph

Coin Telegraph

The troubled firm is also acting as the liquidity provider of Grayscale Bitcoin Investment Trust.

According to a new tweet by Genesis Global on Nov. 16, the institutional crypto lender said it would “temporarily suspend redemptions and new loan originations in the lending business.” In explaining the decision, the firm cited “unprecedented market turmoil” related to the collapse of troubled cryptocurrency exchange FTX, resulting in “abnormal” levels of withdrawals that Genesis Global claims to have exceeded its current liquidity.

The firm also added that its current liquidity was negatively impacted by the collapse of hedge fund Three Arrows Capital in June. As part of bankruptcy proceedings, the brokerage has filed a $1.2-billion claim against Three Arrows Capital.

Though it’s unclear what the firm’s liquidity levels are, Cointelegraph previously reported that Genesis Global had $175 million worth of funds stuck on FTX. In response, Digital Currency Group, the parent company of Genesis Global, sent its subsidiary an emergency $140-million equity infusion to cover losses.

It’s now apparent that the transfer was insufficient to meet consumer withdrawal demands. As for the next steps, Genesis Global stated:

“We have hired the best advisors in the industry to explore all possible options. Next week, we will deliver a plan for the lending business. We’re working tirelessly to identify the best solutions for the lending business, including among other things, sourcing new liquidity.”

Genesis Global also claimed that its spot, derivatives trading and custody businesses remain “fully operational.” In its latest quarterly report, the firm stated that it has $2.8 billion worth of active loans. Since the announcement, its parent company, Digital Currency Group, has clarified that it has no impact on its own operations. However, Genesis Global currently serves as the liquidity provider of the popular $6.7-billion Grayscale Bitcoin Investment Trust (GBTC). The fund is currently trading at a discount of nearly 40% to its net asset value at the time of publication in part due to investor speculation on its exposure to Genesis Global.

Update 2:35 PM UTC: Cryptocurrency exchange Gemini confirms Genesis Global is the lending partner for its Earn program and will not be able to meet customer redemptions within five business days. Gemini also states that the event does not affect the firm’s other products and services and that “all customer funds held on the Gemini exchange are held 1:1 and available for withdrawal at any time.”

Update 2:40 PM UTC: GBTC released a statement saying that "all Grayscale products remain safe and secure, held in segregated wallets in deep cold storage by our custodian @Coinbase." The company also claimed its digital asset products are unaffected, and that the firm does not borrow nor lend with custodied assets.

Genesis Global

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