The crypto currency lender Genesis Global Holdco became the latest company to declare bankruptcy late on Thursday, following the demise of the exchange founded by Sam Bankman-Fried, FTX.
With the promise that customers could deposit their crypto holdings and receive sky-high returns, Genesis and a group of other large lending institutions attracted millions of customers a year ago. However, Genesis’ bankruptcy makes it the fourth major crypto lender to fail since the beginning of the year, when a downturn in the digital asset market caused prices to fall. Celsius Network and Voyager Digital are two other major lenders that have gone out of business. Their customers lost billions of dollars in deposits.
Genesis Crypto suffered in the aftermath of FTX’s implosion, but it survived longer.
The company announced in November that withdrawals would be halted, citing the “market turmoil” brought on by Mr. Bankman-Fried’s company’s bankruptcy.
Genesis Global Holdco, Genesis Global Capital, and Genesis Asia Pacific, two of the company’s subsidiaries, were all included in the bankruptcy filing that the company made in the Southern District of New York.
Genesis is a division of the Digital Currency Group, a cryptocurrency conglomerate established in 2015 by Barry Silbert. Mr. Silbert’s management and the problems at Genesis have recently put him at odds with Cameron and Tyler Winklevoss, two other prominent crypto executives who run the exchange Gemini.
The Securities and Exchange Commission brought a case against Genesis last week for partnering with Gemini to offer unregistered securities. At the time, the chair of the S.E.C., Gary Gensler, stated that Genesis and Gemini had evaded “disclosure requirements designed to protect investors.”
The Winklevosses have made it public that they believe Genesis parent company, DCG, is stalling to keep customer funds.
In addition, they have asserted that DCG and Genesis fabricated financial data and misrepresented the value of the company’s assets in order to create the impression that Genesis was in better health than it actually was.
The charges brought by the S.E.C. against Genesis and Gemini were a part of a larger campaign to target crypto lenders. The S.E.C. fined a crypto lender called BlockFi $100 million in February. BlockFi was one of the first major victims of the collapse of FTX when it filed for bankruptcy in November.
Earlier on Thursday, the Securities and Exchange Commission (SEC) announced a $45 million settlement with Nexo, a different crypto lending company, for violating securities law.
Public by world news spot live