WSJ: One of the largest crypto lenders Genesis is considering bankruptcy

01/05/2023

One of the largest crypto lenders, Genesis Global Trading Inc. laid off 30% of its employees and is consideringpossibility of filing for bankruptcy.

The Wall Street Journal writes about this, citing sources familiar with the matter.

Reportedly, the layoffs were not limited to one department but affected the entire company. Genesis has 145 employees after the layoffs.

As Genesis explained, the firm is working with its advisors to "preserve client assets and move the business forward."

“The crypto lender has become the latest digital firmassets that is struggling to survive. Last year was marked by a series of cryptocurrency bankruptcies as the Federal Reserve raised interest rates, lowering the level of the most speculative investments. Explosions in the unregulated sector trickled down to other companies, demonstrating the interconnectedness of the newborn industry. The Fed has made it clear that it will continue to raise rates. Investors are bracing for even bigger losses in cryptocurrencies,” the WSJ article said.

Genesis' problems began with bankruptcy andliquidation of the cryptocurrency hedge fund Three Arrows Capital, to which the company provided a $2.4 billion loan. Within days of the collapse of the hedge fund, Genesis laid off 20% of its employees, and the company's CEO Michael Moreau resigned.

Another blow to financial stabilityGenesis was the collapse of crypto exchange FTX and its associated company Alameda Research in November last year. According to WSJ sources, Genesis loaned Alameda at least "hundreds of millions of dollars."

On November 16, Genesis suspended the provision and repayment of loans.

To save the situation, Genesis tried to attract $1 billion in investment. In particular, the company turned for help to the investment bank Moelis & Co.

But Genesis and Moelis are noware considering filing under Title 11 of the United States Bankruptcy Code. The clause provides temporary protection from creditors to allow the company to continue to operate.

Genesis is owned by Digital Currency Group, who also manages the managercrypto assets Grayscale Investments, cryptocurrency news agency CoinDesk, mining company Foundry, crypto exchange Luno, data platform TradeBlock, wealth management company HQ and DCG Real Estate.
www.wsj.com/articles/crypto-lender-genesis-lays-off-30-of-staff-11672939434?mod=hp_lead_pos4