In FTX’s wake, giant Genesis could file for bankruptcy this week. This would cause the bitcoin price to collapse, which has been experiencing a period of calm in recent days.
Despite the relative calm in the cryptocurrency market, with bitcoin above $20,000, the ecosystem is holding its breath. Indeed, a great actor would number his days. Crypto lending platform Genesis, weakened by FTX drop, could also fail this week, reveals Bloomberg and other specialized media. However, such an event could once again weaken the cryptocurrency market, Vincent Boy, a technical analyst at IG, said at a press conference. Indeed, in addition to inflicting another blow to the crypto ecosystem, the failure of this new giant could lead to upheavals in other players, in particular the crypto giant Gemini or, by extension, for the specialized media CoinDesk.
The situation has been worsening for several months now for Genesis, previously weakened by the collapse of the Terra Luna ecosystem. After laying off 20% of its staff in August, Genesis shed 30% of its staff in early January, down to just 145 employees. The real blow was caused by the bankruptcy last November of FTX, a strategic player for Genesis, given that the company had blocked 175 million dollars from the American giant.
Due to lack of liquidity, Genesis announced to its customers on November 16 that they could no longer withdraw their cryptocurrencies from the platform. What was supposed to be “temporary” never returned to normal, internally weakening Genesis and some of its partners and creditors. With no solution found so far, Genesis this week agreed a “pre-arranged bankruptcy plan” with its major creditors. The latter would accept a “grace period, for most payments, of one to two years according to the pre-established bankruptcy plan”, sources specify to The block it’s at Bloomberg. In return, they will be able to receive payments in cash and shares in Genesis’ parent company, Digital Currency Group (DGC).
Tensions between Gemini and Genesis
Among the creditors there are above all the Winklevoss brothers, founders of the Gemini crypto exchange platform, which still manages almost $30 billion of cryptocurrency. However, the tension has escalated a notch between Gemini and Genesis. In fact, since 2020, the two companies have been partners in the “Gemini Earn” program, which has allowed Gemini customers to earn up to 8% interest by lending their cryptocurrencies to Genesis. However, on Nov. 16, Genesis suspended the ability for lenders to withdraw their cryptocurrencies. Today, Genesis holds $900 million from Gemini’s 340,000 lenders. Funds that Gemini claims today.
By asking Genesis for these 900 million in a letter posted on Twitter in early January, Cameron Winklevoss attracted the attention of the US stock market policeman, the SEC. Result: The SEC decided to prosecute the two companies, believing that the “Gemini Earn” program should have been registered with the competent authorities, in order to protect investors.
Things don’t stop there for Genesis. According to a letter to shareholders dated Monday and seen by Bloomberg, DGC announced it was “suspending its quarterly dividends to conserve cash.” A decision that puts the specialized media in difficulty CoinDesk, known for first revealing the close ties between Alameda Research and FTX. In fact, Genesis’ parent company DGC had acquired CoinDesk in 2015 for about $600,000. To date, the media, which has hired the Lazard company as a financial adviser, is exploring a “full or partial sale,” its boss Kevin Worth told AFP. The block.