Genesis, one of the biggest crypto lending companies in the world, has declared bankruptcy. It has been weakened by the bankruptcies of other companies specializing in crypto-currencies, such as 3 Arrows Capital and FTX.
19 days: this is the time it will have taken for 2023 to make its first victim in the crypto-currency sector. Genesis, one of the largest crypto lending platforms, has declared bankruptcy. The news was announced by press release on the night of January 19 to 20, 2023. The company specifies that it intends to liquidate its assets in order to reimburse its creditors.
This is a new shock for the world of cryptocurrencies, already weakened by a historically difficult year 2022. Between a collapse in the price of Bitcoin and other crypto-currencies, but also numerous bankruptcies, the market is still very feverish. The news of the fall of Genesis demonstrates that the crypto crisis is not over and that it could lead to new victims in 2023.
The impact of the 3AC and FTX bankruptcies
Genesis is one of the largest cryptocurrency lending companies: Reuters reported in December 2022 that the company loaned the equivalent of more than $130.6 billion during the year. But, despite its size, Genesis was very affected by the events of 2022. It was first of all the bankruptcy of 3 Arrows Capital (3AC) that weakened it: at that time it would have lost “ several hundred million dollars ”, according to CoinDesk.
Ultimately, it was the implosion of FTX in November 2022 that dealt the final blow to Genesis. FTX, which used to be the 2nd largest cryptocurrency exchange in the world, abruptly went bankrupt after it was revealed that the company had very poor management of its clients’ funds. In the debacle, Genesis lost more money: she explained that she lost access to $175 million.
Genesis never really managed to recover from this last crisis. A few days after the bankruptcy of FTX, it announced that it would freeze its clients’ withdrawals in order to preserve its liquidity and avoid bankruptcy – measures which will not have been effective enough. Today, Genesis owes more than $3.5 billion to its creditors, including $900 million to the Gemini exchange.
As dire as the situation is for Genesis and its customers, many observers couldn’t help but find some irony in it. FTX’s bankruptcy was partly blamed on the CoinDesk newspaper, which was the first to report doubts about the management of the company in an article, before other analyzes revealed the extent of the problem. However, CoinDesk is part of the Digital Currency Group, a company that also owns… Genesis.
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