2022 has bought the collapse of many projects as several firms filed for bankruptcy in the crypto space.
It all started with Terra’s crash in May, after which Celsius filed for bankruptcy in July. This was followed by Three Arrows Capital, a crypto hedge fund, and Voyager, a crypto brokerage service.
Now, after four months, the crypto space has been hit with another bankruptcy case filing, FTX, which filed Chapter 11 of bankruptcy protection this month. The FTX collapse, in turn, has affected many other projects like Gemini, BlockFi and Genesis.
How Did 3AC’s Collapse Impact Genesis?
Meanwhile, Genesis Trading, a cryptocurrency market operator and financing company, started facing issues in June 2022 when the firm was hit by severe liabilities of hundreds of millions of dollars. These losses emerged along with the demise of Three Arrows Capital. Additionally, sources revealed that Genesis’s losses are connected to over-leveraged fund manager Three Arrows Capital and Hong Kong crypto financier Babel Finance.
Former CEO Michael Moro had remarked on behalf of Genesis, which is owned by Digital Currency Group (DCG):
“As we announced on June 17, We minimized our damages with a big competitor who could not fulfill a margin call to us.”
However, Michael Moro later claimed that they had liquidated security, covered their downward position, and recovered.
FTX Gets Contagion, Spreads Genesis
Now, days after FTX and Alameda collapsed, Genesis, which acquired $140 million from its parent company, the Digital Currency Group, has decided to halt new loan sanctions and withdrawals. This was announced through a Twitter thread.
Recently, Genesis announced that its derivatives business had nearly $175 million in locked funds in its FTX trading account. After this announcement of Genesis’s connection with FTX, many projects like Tether and Galaxy Digital claimed no relation with Genesis or its partner Gemini. However, Genesis has stated that it currently has no relationship with FTX or Alameda Research.
As per Genesis Global Capital, the firm had more than $2.8 billion in total active loans. On the other hand, Derar Islim, the present CEO, claims that Genesis Trading serves as Genesis Global Capital’s broker and operates independently.
Islim has assured creditors over the call that the firm is looking for solutions and trying to find a new source for fresh liquidity. He has assured people that the complete details will be revealed next week. As per Islim, FTX’s collapse saw too many withdrawal requests, which overpowered Genesis’ present liquidity.