The crypto landscape has undergone another tectonic shift as crypto lender Gensis files for Chapter 11 bankruptcy. This marks another company in the crypto space succumbing to the volatile nature of the industry.
CoinDesk reported on January 19, 2023 that Genesis Global Holdco has filed for Chapter 11 bankruptcy. It is the parent company of cryptocurrency lender Genesis Global Capital. CoinDesk notes that the filing sees Genesis estimate 100,000 creditors and between $1 billion and $10 billion in liabilities.
Genesis Global Holdco’s bankruptcy filing is one of three, the other two being the aforementioned Genesis Global Capital and Genesis Asia Pacific. These three companies operate under the umbrella of the Digital Currency Group, the owners of CoinDesk.
Just last week, the The SEC accused Genesis and Gemini with the sale of unregistered securities. As part of the duo’s Earn program, Genesis loaned user Gemini crypto, sent a portion of the profits to Gemini who deducted a fee, and then returned the profits to customers.
These bankruptcies and SEC charges are part of a series of events that have rocked the cryptocurrency industry. One of the largest marketplaces, FTX, filed for bankruptcy in November 2022 and its former co-founder was charged with fraud, conspiracy and money laundering. Crypto.com has since laid off 20% of its employees, citing the collapse of FTX as a contributing factor.
Many industries seem to be crossing paths in this new area of blockchain technology. Immutable, known for its Web3 development, has apparently overcome these problems thanks in part to its business strategy. Company co-founder Robbie Ferguson notes that they exist not to “run a crypto hedge fund” but to “change digital ownership.”
It is certainly an interesting time in the crypto space. Do you think we are looking at something similar to the dotcom bubble or is this just a roadblock? It can be hard to tell, especially with companies like GameStop venturing into the space with its NFT Market and Microsoft investing in Korean Web3 and blockchain developer We have done.
The good news is that despite Genesis filing for bankruptcy, the company expects funds will remain to pay unsecured creditors. However, this filing and recent events certainly paint a gloomy picture for crypto.