Genesis Global Trade, one of the oldest and oldest institutions of cryptocurrency, is in dire straits. In November, following the FTX crypto exchange boom, the company’s lender was forced to freeze customer withdrawals—never a good sign. Almost two months later, Genesis is report on the verge of bankruptcy.
Although Genesis has not said publicly that bankruptcy is imminent (Derar Islim, Interim CEO, speak he remains “focused on finding solutions”), the company is said to have laid off 30% of its workforce this week — the latest sign of the company’s poor financial health.
Founded in 2013, Genesis has become central to the day-to-day operations of the cryptocurrency industry. In 2021 alone, the company issued $131 billion in loans and set up $116.5 billion in transactions. To finance these loans, Genesis borrowed from individuals and organizations that owned large numbers of coins, also known as whales, who received a portion of the profits in return.
While the wave of crypto hype goes unchecked, Genesis is in for a hot period — but its luck ran out in 2022. The lender has been in trouble since July, when the fund Three Arrows Capital hedge collapses, taking with it $1.2 billion in crypto $2.36 billion it borrowed from the firm. Genesis once again finds herself on the wrong side of fall fall; when FTX filed for bankruptcy on November 11, the company lost $175 million stored with the exchange.
Digital Currency Group (DCG), the parent company of Genesis, joined the bailout in both cases. Despite the support, “Unprecedented market turmoil“created by the FTX situation forcing Genesis to freeze withdrawals and start Hunt for emergency funding. But like FTX, the Genesis rescue package has yet to materialize.
The crypto market boom in 2021 has instilled fear of missing out among investors who have attracted huge amounts of money. But that FOMO is now long gone, replaced by doubts about both the promises and accounting practices of the major crypto companies. alleged fraud at FTX.
Venture capital investment in crypto is drying up, according to a recent paper published by market data house PitchBook. After a “breakout year” in 2021 in which $21 billion of capital poured into the industry, the demand for crypto investments is rapidly declining. By the third quarter of 2022, funding was down 34.3% year-on-year, and the number of transactions had dropped to a two-year low.
David Bailey, Managing Director at Bitcoin Magazine, who also leads an activist group representing the interests of investors in Grayscale Bitcoin Trust, a subsidiary of DCG. He described the shortfall as “large and of unknown scope.”
Brad Harrison, the team leader behind decentralized lending protocol Venus, paints a similar picture. “The Genesis bankruptcy should come as no surprise in the aftermath of the “tectonic” events that have rocked the crypto industry over the past year,” he said. But as for the specifics, “we’re all just guessing what happens behind closed doors.”