Genesis’s trading arm moving funds on blockchain, bankrupt units reveal extent of liabilities

Lachlan Keller

1 year ago

Stack of Ethereum coins. | Bankrupt Genesis’s trading arm still moving funds on blockchain, reveals extent of liabilities.

According to on-chain data, the trading arm of bankrupt crypto lending firm Genesis is operating and moving tokens on blockchain after three of the company’s entities — Genesis Global HoldCo, Genesis Global Capital LLC and Genesis Asia Pacific Pte. — filed for Chapter 11 bankruptcy on Thursday.

Fast facts

On-chain data shows Genesis Global Trading Inc., the Genesis spot and derivatives trading business, sent 50,000 ETH to Coinbase, 20,000 ETH to Bitstamp and 5,000 ETH to Kraken on Thursday, the day of the bankruptcy hearing, according to Etherscan.
On Saturday, Genesis’s parent company, Digital Currency Group Inc. (DCG), tweeted an update on the bankruptcy and said the trading arm will “continue to operate business as usual.”
Genesis Global Capital suspended user withdrawals on Nov. 16 following the collapse of cryptocurrency exchange FTX.com, citing “abnormal withdrawal requests” that exceeded its liquidity. The company also said it had US$175 million of assets locked up in FTX.
In the company’s Chapter 11 bankruptcy filings, it listed US$3.5 billion owed to its top 50 creditors. They include the Gemini crypto exchange, founded by the Cameron and Tyler Winklevoss twins, which is listed as owed US$766 million. The names of some other large creditors were reportedly redacted.
In its first day of proceedings in the U.S. Bankruptcy Court for the Southern District of New York, Genesis interim chief executive Derar Islim said the company had US$5.1 billion in liabilities in mid-November when it froze customer withdrawals.
The bankruptcy petition listed liabilities as between US$1 billion to US$10 billion, with more than 100,000 creditors. Genesis listed its estimated assets in the same range.
Genesis’s financial woes were compounded by its exposure to the crypto hedge fund Three Arrows Capital (3AC) which filed for bankruptcy in July last year after the collapse of the Terra/Luna stablecoin. Parent firm DCG said it assumed part of the liability for a US$1.2 billion loan to 3AC.