Genesis' Crypto Lending Businesses Files for Bankruptcy Protection

Genesis Global Holdco, LLC the parent company of troubled crypto lender Genesis Global Capital, filed for Chapter 11 bankruptcy protection late Thursday night in New York federal district court.

In a voluntary petition, Genesis Global Holdco, LLC estimated it held between $100 million and $500 million in assets, counts $100 million and $500 million in liabilities, and has between 1 and 49 creditors. Subsidiaries Genesis Global Capital, LLC and Genesis Asia Pacific Pte. Ltd have also filed for bankruptcy protection, the filing said.

Those companies comprise Genesis' crypto lending business that was rocked in 2022 by the implosions of hedge fund Three Arrows Capital and crypto exchange FTX. Genesis’s other subsidiaries involved in the derivatives and spot trading and custody businesses and Genesis Global Trading are not included in the filing and continue client trading operations, according to a press release.

Since the collapse and bankruptcy of crypto exchange FTX in November, Genesis had been scrambling to raise fresh capital or reach a deal with creditors. The company's institutional lending unit had been forced to suspend redemptions and new originations as a result of the FTX implosion, and – along with parent Digital Currency Group (DCG) – had come under increasing pressure to make good on $900 million of locked deposits. Genesis late last year retained investment bank Moelis & Company to assist with exploring options.

CoinDesk reported that Genesis also suffered losses of hundreds of millions of dollars, several months ago, due to loans made to failed crypto hedge fund Three Arrows Capital.

Earlier this month, Genesis announced it was laying off 30% of its staff, taking it down to 145 employees.

Today's bankruptcy filing could have broader implications for bitcoin as Genesis and digital assets manager Grayscale share the same parent company in DCG. Grayscale operates the Grayscale Bitcoin Trust (GBTC), which has $10 billion-plus in assets under management and was late last year trading at a record discount to net asset value, although that discount has narrowed recently. There are market fears that the repercussions of the Genesis bankruptcy could somehow lead to the liquidation of GBTC's holdings of 600,000+ bitcoin.

DCG is also the parent company of CoinDesk.