Genesis Reportedly Owes Over $3B to Creditors

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.