Cryptocurrency lender Genesis Global Holdco filed for bankruptcy late Thursday, the latest crypto company to do so following the collapse of the exchange founded by FTX Sam Bankman Fried.
A year ago, Genesis and a group of other large lending firms attracted millions of customers with promises that they could deposit their crypto holdings and earn sky-high returns. But Genesis’ bankruptcy filing makes it the fourth major crypto lender to fail since last spring when there was a downturn in the digital asset market sent prices falling. Other large lenders that have gone out of business include, among others Celsius network and Voyager Digital, whose customers lost billions of dollars in deposits.
Genesis survived longer but suffered the effects of FTX’s implosion. In November, the company said it was freezing payouts, citing “Market Turmoil” caused by the bankruptcy of Mr. Bankman-Fried’s business.
The company’s bankruptcy filing in the Bankruptcy Court in the Southern District of New York involved three companies – Genesis Global Holdco and two of its subsidiaries, Genesis Global Capital and Genesis Asia Pacific.
Genesis is a subsidiary of Digital Currency Group, the crypto conglomerate founded by Barry Silbert in 2015. Mr. Silbert’s management and the troubles at Genesis have recently brought him into conflict with two other prominent crypto executives, Cameron and Tyler Winklevoss, who run the company, who are swapping twins.
Last week, the Securities and Exchange Commission calculated Genesis to offer unregistered securities in partnership with Gemini. Gary Genslerthe SEC chairman said at the time that Genesis and Gemini circumvented “disclosure requirements to protect investors.”
The Winklevosses have publicly accused Genesis’ parent company, DCG, from keeping funds belonging to its clients. They have also alleged that DCG and Genesis misrepresented financial information and mischaracterized the value of company assets to make it appear that Genesis was in better health than it was.
The SEC’s indictments of Genesis and Gemini were part of a broader crackdown on crypto lenders. Last February, the SEC announced $100 million in penalties against BlockFi, a crypto lender. BlockFi filed for bankruptcy in November, becoming one of the first major casualties of FTX’s collapse.
The SEC announced this on Thursday a $45 million settlement with another crypto lending firm, Nexo, for violating the Securities Act.
