Genesis Reportedly Owes Over $3B to Creditors
- People familiar with the matter have said that Genesis had hired investment bank Moelis to explore its options to cover the shortfall, but there was little capital infusion interest.
- The sources further said that Genesis’ parent company, Digital Currency Group, was now looking to sell a portion of its venture capital portfolio to fill in the shortfall.
Shutterstock
Troubled crypto lender Genesis apparently owes more than $3 billion to its creditors, and its parent company is now looking at asset sales to cover the shortfall, the Financial Times reported on 12 January.
The publication cited people familiar with the matter, who said Genesis had hired investment bank Moelis to explore its options in covering the $3 billion shortfall, but there was little interest in capital infusion. Digital Currency Group (DCG) — which owns Genesis and Grayscale Investments — was now considering selling a portion of its venture capital portfolio in order to raise fresh capital for the crypto lender.
The sources noted that DCG’s venture arm had more than 200 crypto-related projects under its belt, including “exchanges, banks and custodians” in at least 35 countries, worth around $500 million. These venture investments were illiquid, however, and will take some time to sell considering investors were more careful with funding new projects since the collapse of FTX.
Crypto lender Genesis paused customer withdrawals on 16 November last year, citing “unprecedented market turmoil” caused by the collapse of crypto exchange FTX. Last week, DCG CEO Barry Silbert told shareholders that he had cut 30% of Genesis’ workforce in an effort to reduce costs at the company.
On Tuesday, Gemini exchange co-founder Cameron Winklevoss penned an open letter to the board of DCG, claiming that Silbert and Genesis had defrauded more than 340,000 users — who were part of the exchange’s Earn program — out of $900 million. In his letter, the Winklevoss twin claimed that Genesis had lent over $2.3 billion to Three Arrows Capital (3AC), which left the crypto lender with a loss of $1.2 billion once 3AC collapsed in June 2022.
- An investigation from the New York Attorney General’s office has allegedly found that Gemini was aware of Genesis’ weak financial position, but still lied to investors.
- The lawsuit is looking to ban DCG, Genesis, and Gemini from the New York financial industry, seek restitutions for investments, and the return of “ill-gotten gains”.
Shutterstock
- Bankrupt crypto lender Genesis is trying to recover around $500 million from DCG, and another 4,550.5 BTC from DCGI, which it had loaned to the two companies in 2022.
- Both DCG and DCGI requested that the debts were converted to open loans on 9 May, but Genesis declined both offers and demanded the repayment of the loans with interest.
- Cameron Winklevoss, co-founder of crypto exchange Gemini, proposed a plan that would see Digital Currency Group pay close to $1.5 billion over the next five years.
- The Winklevoss twin said that if the “final offer” is not accepted by the end of the week, Gemini would file a lawsuit against DCG and CEO Barry Silbert.