crypto strategy

Former Genesis executives raised millions for the crypto hedge fund just as the former company was on the verge of bankruptcy

Just weeks before the Genesis crypto lender asked bankruptcythree former employees of the company had secured millions of dollars for a new crypto hedge fund, according to correspondence viewed by CNBC.

Matt Ballensweig, who left Genesis in September after more than five years with the company, messaged a potential investor in mid-December about a fund he was launching called Hunting Hill Digital. Ballensweig said he had already secured $2.5 million from Bessemer Venture Partners at a $30 million post-money valuation, and wrote in the post that he and his partners were in the process of raising 5 million additional dollars.

The fund’s “flagship” would go live in the first quarter of 2023, according to the post.

The fund’s other partners would include Martin Garcia, who spent more than six years at Genesis, and Reed Werbitt, Genesis’ former head of trading, according to the post. Werbitt, Garcia, and Ballensweig all left Genesis around the same time in 2022.

Genesis, which is owned by Barry Silbert’s Digital Currency Group, filed for bankruptcy protection Thursday, the latest victim of the industry contagion caused by the collapse of crypto exchange FTX in November. In its bankruptcy filing, Genesis listed more than 100,000 creditors, with aggregate liabilities ranging from $1.2 billion to $11 billion.

Ballensweig was named in the legal documents surrounding the Genesis loan book implosion. Gemini, a crypto exchange and major customer of Genesis, accused Ballensweig of falsely reassuring Gemini in July that Genesis was financially stable. Gemini claimed that Ballensweig told his representatives that Genesis had “capital to operate…for the long term,” according to court documents.

Ballensweig did not respond to a request for comment on the allegations made against him by Gemini or his recent capital raise.

Ballensweig spent his final nine months at Genesis as Managing Director and Co-Head of Trade and Lending.

The former Genesis employees teamed up with Adam Guren of the Hunting Hill hedge fund, Ballensweig said. Hunting Hill is a $718 million hedge fund, which launched in 2010 and transitioned into investing in digital assets in 2020 with a crypto opportunity fund.

Neither Hunting Hill nor Bessemer immediately responded to a request for comment.

Ballensweig touted the flagship as an “alpha (delta neutral) multistrat”, or fund specializing in multi-strategy, low-risk, high-return investments. He added that the trio would also launch two other beta products, including a “Top 25 Index” and a “DeFi beta”.

“I think you would be a valuable partner at the start,” Ballensweig said in his speech.

Ballensweig isn’t the only Genesis alum to want to start a fund. Roshun Patel, a former vice president of Genesis who left the company in March after almost four years, was raise money for a new fund in mid-2022. CNBC reached out to Garcia, Werbitt and Patel to comment on their raises, but did not immediately respond.

LOOK: Crypto lender Genesis files for bankruptcy

Crypto lender Genesis files for bankruptcy, bitcoin recovers $21,000 level: CNBC Crypto World

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