• In November, crypto lending firm Genesis held $5.1 billion in liabilities.
• This was revealed in a first-day motion in the U.S. Bankruptcy Court for the Southern District of New York.
• The liabilities came following Genesis‘ freeze on withdrawals due to the collapse of FTX and sister company Alameda.
Crypto Markets Today reported on the news that crypto lending firm Genesis held $5.1 billion in liabilities in the weeks following its freeze on withdrawals in November. This was revealed in a first-day motion in the U.S. Bankruptcy Court for the Southern District of New York, which was signed by interim CEO Derar Islim. The motion provided a breakdown of Genesis’ financial state heading into its restructuring.
The liabilities stemmed from the collapse of FTX and sister company Alameda, which sparked a “run on the bank” as customers demanded Genesis repay $827 million in loans. Consequently, the lending units were forced to freeze withdrawals, leaving Genesis with $5.1 billion in liabilities. This move caused the three Genesis entities – Genesis HoldCo, Genesis Global Capital LLC and Genesis Asia Pacific PTE. LTD – to file for Chapter 11 bankruptcy protection.
The events leading up to Genesis’ financial troubles began with the crash of FTX and Alameda. In October, the two companies lost $5.5 billion in assets and faced negative market sentiment due to the risks associated with their business model. This caused extreme volatility in the crypto markets, resulting in losses for many companies.
The losses were especially difficult for Genesis, as its business model relied heavily on FTX and Alameda. As a result, Genesis was left with no other option but to suspend withdrawals and file for bankruptcy protection.
The news of Genesis’ financial troubles had a ripple effect throughout the crypto markets, as investors became more cautious about their investments. This caused the price of Bitcoin to dip slightly, as well as the prices of other cryptocurrencies.
Despite the news, many in the crypto industry remain optimistic about the future of the sector. Many believe that the crypto markets are still in a nascent stage and that the sector will continue to grow in the coming years.
In the meantime, Genesis is in the process of restructuring its business model and developing a new strategy for the future. The company is working to create more transparency for its customers and to ensure that its business practices are in line with regulatory standards.
Genesis’ financial troubles have been a lesson for the entire crypto industry. It has highlighted the importance of having robust risk management practices in place and of being aware of the risks associated with investing in the crypto markets. It has also demonstrated the need for more regulation in the sector to protect investors’ interests. As the industry continues to grow, it is likely that similar situations will arise in the future, so it is important to be prepared.