Institutional crypto broker Genesis files for bankruptcy

Major crypto broker Genesis has filed for bankruptcy in US court, owing its creditors more than $3.4bn.

The Chapter 11 filing is directly linked to the earlier collapse of crypto exchange FTX in November, Genesis was a major lender to FTX and was named among its largest creditors after the collapse.

FTX’s downfall was triggered by news that its sister company, Alameda Research, had reportedly borrowed $10bn worth of client assets from FTX.

Derar Islim, Genesis’s interim CEO, said the company had made “significant progress refining our business plans to remedy liquidity issues,” however, added that, “an in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all Genesis stakeholders.”

Islim said that Genesis has more than $150m of cash on hand to provide liquidity and to support its restructuring.

In its court filing, Genesis listed over 100,000 creditors, among those is thought to include Gemini, the crypto exchange run by Cameron and Tyler Winklevoss, to which Genesis owes $900m.

According to the Genesis website, it originated over $130bn worth of crypto loans in 2021.

Genesis is owned by Digital Currency Group (DCG), a crypto conglomerate with a portfolio of companies across the industry, including publisher CoinDesk. 

According to The Wall Street Journal, CoinDesk earlier this week appointed advisors to explore a partial or full sale from DCG.

In a cruel twist, reporters at CoinDesk broke the original story on Alameda Research, which led to the collapse of FTX and triggered the crypto contagion that led to Genisis’s bankruptcy.