Cryptocurrency exchange Genesis Global Trading reportedly owes its creditors more than $3 billion, according to a January 12 report by the Financial Times. Its parent company, Digital Currency Group (DCG), which also owns Grayscale Investments and a large group of digital asset funds, is looking to sell off some of its venture capital holdings to make up for the shortfall.
According to people familiar with the matter, DCG’s investment arm has more than 200 cryptocurrency-related projects “as exchanges, banks, and custodians in at least 35 countries,” with a total value of about $500 million. Reportedly, Genesis has appointed investment bank Moelis to explore strategic alternatives, though people familiar with the matter said there has been little interest in the capital injection. On January 5, Genesis laid off 30% of its employees as a cost-cutting measure, the second such in six months.
On January 12, DCG President Barry Silbert wrote to shareholders that “bad actors and the implosion of major crypto companies have wreaked havoc on the industry.” Silbert also revealed that Three Arrows Capital still owes Genesis $447.5 million and 4,550 bitcoins (BTC) worth $78 million, due in May 2023. Three Arrows Capital is currently in bankruptcy proceedings and creditors have expressed great frustration with the process.
Cointelegraph reported on November 16, 2022 that Genesis has halted withdrawals citing “unprecedented market turmoil.” At the time, the company reportedly had $175 million in funds locked up in FTX and had already received a $140 million capital infusion to cover the losses.
Previously, Genesis Global was thought to have a shortfall of $1 billion. According to Cameron Winklevoss, co-founder of cryptocurrency exchange Gemini, Genesis lent more than $2.3 billion to now-defunct hedge fund Three Arrows Capital, causing a loss of $1.2 billion when the company went bankrupt in June 2022. It lent more than $900 million of Customer deposits for Genesis as part of its Earn program. More than 340,000 users have been affected in the wake of the Gemini Earn and Genesis Global dispute.
—Cameron Winklevoss (@cameron) January 10, 2023
This is a developing story, and more information will be added as it becomes available.