Crypto giant Genesis owes more than $3,5B to creditors

• Genesis has filed for bankruptcy is reportedly owing more than $3.5 in assets.
• This debt profile may fuel contagion to Grayscale Investments and its huge BTC reserve.

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Genesis Global, the embattled subsidiary of the Digital Currency Group (DCG) has finally come out to file for Chapter 11 Bankruptcy. As reported by Coindesk, the company is owing its creditors more than $3.5 billion and it names over 100,000 creditors in its bankruptcy filing published on Thursday.

Genesis buckled under the weight of its own crisis last year when it first halted withdrawals with the collapse of the FTX Derivatives Exchange. Genesis’s woes were engineered following its exposures to the crypto hedge fund, Three Arrows Capital (3AC) which went bankrupt mid-last year.

While still dealing with the 3AC exposure, the FTX implosion and filing for bankruptcy on November 11, finally exposed the financial woes that have been lingering for several months. Per the report, Genesis is owing some very prominent investors huge sums of money, and they amount to those to whom the bankruptcy proceedings will give priority.

The company said it hopes that by the end of the bankruptcy proceedings, it will have enough funds to repay all users with unstructured credits. The first primary consideration for Genesis is a restructuring that can either result in a selloff or reorganization. The firm said it is exploring the best option to satisfy all of its creditors.

The Genesis Creditors

Gemini comes off as the largest creditor known for now to genesis. The company is owing the crypto trading platform over $800 million belonging to Gemini Earn customers. Gemini tapped Genesis to be its trusted partner for its Yield Product, and when Genesis locked withdrawals, the exchange has been unable to retrieve its funds.

Gemini’s CEO, Cameron Winklevoss has been calling out Barry Silbert, the CEO of DCG and Genesis to repay the said amount owed to Earn customers. Besides Gemini, Genesis also owes trading giant Cumberland, Mirana, MoonAlpha Finance, and VanEck’s New Finance Income Fund, all of whom rank in the top 50 creditors.  

A total sum of $18.7 is owed to Cumberland DRW while Mirana is owed $151.5 million. MoonAlpha Finance, a startup strongly affiliated with defunct Babel Finance is being owed a total of $150 million with the VanEck Fund laying a claim of $53 million to the embattled company. 

There are a few unknown creditors that are also being owed significant sums each two of the most prominent being $230 million and $462.2 million respectively.

Is the crypto market in danger?

It is hard to disconnect the distress in Genesis and the parent company DCG from the crypto world. The Digital Currency Group has subsidiaries including Grayscale Investments and Coindesk which is now up for sale and is being eyed by Cardano founder, Charles Hoskinson.

Should the contagion of the Genesis bankruptcy spread to Grayscale for instance, there is a threat that the more than 600,000 Bitcoin under the firm acquired through the Grayscale Bitcoin Trust (GBTC) can be under immense threat.

There is already a huge fear about the liquidity of this asset, and this bankruptcy stokes the fear much more. Bitcoin appears stable for now with price trading at $21,058.44, up 1.36% over the past 24 hours.

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