According to the documents filed in bankruptcy court by Genesis Global and its associated organizations, the parent company, Digital Currency Group (DCG), owes its subsidiaries more than $1. 65 billion.

The holding firm Genesis Global Holdco (GGH), the lender Genesis Global Capital (GGC), and Genesis Asia Pacific are the three organizations that have sought protection under bankruptcy laws (GAP).

## DCG owes subsidiaries more than $1.65 billion

[A declaration](https://www.coindesk.com/business/2023/01/20/digital-currency-group-owes-subsidiary-genesis-global-over-165b/) was filed at the end of January with the bankruptcy court of the Southern District of New York (SDNY) by Paul Aronzon, a member of a special committee of the board of directors of GGH, the holding company of the Genesis Global entities. It said that DCG's debt to Genesis includes loans of $575 million, due in May of this year, and a $1.1 billion promissory note due in June 2032.


The special committee is investigating the lending operations between GGC and DCG to evaluate whether or not the defunct companies have any legitimate claims against DCG connected to these transactions that could benefit the restructuring process.


Lev Dassin, a former acting US Attorney for New York's Southern District, is in charge of the investigation by the legal firm Cleary Gottlieb Steen & Hamilton LLP, which also represents Genesis in the proceedings.


To be more specific, the investigation is looking into the lending of "approximately $850 million in unsecured loans to the DCG entities, the DCG (promissory) note, various transactions that restructured the $850 million in unsecured loans in November 2022, and DCG's purported exercise of a $52.5 million set-off in November 2022.


Additionally, the committee is looking at potential avoidance actions and the different types of actions that can be taken around DCG entities, Gemini Trust Company, LLC, and other Genesis lenders.


When a debtor takes action to avoid or annul certain fund transfers before filing for protection under Chapter 11, this is known as an avoidance action. The January filings are another chapter in a series of high-profile failures that have shaken the cryptocurrency industry over the past year.


These failures include the implosion of the Terra cryptocurrency exchange and the collapse of the FTX cryptocurrency exchange. Genesis became entangled in the failures of the hedge fund Three Arrows Capital and FTX. Both of these businesses eventually went bankrupt. Genesis was compelled to restrict withdrawals in its lending unit shortly after FTX filed for Chapter 11 bankruptcy in November. 

Gemini, [the cryptocurrency exchange](/news/article/crypto-exchange-gemini-cuts-staff) owned by Cameron and Tyler Winklevoss, was a key customer of Genesis's lending business and was one of the reasons for the suspension. Since then, CEO Cameron Winklevoss has been running an open campaign against Genesis, DCG, and the company's CEO, Barry Silbert.

Before it filed for protection under Chapter 11, Genesis Global had attempted to obtain new cash or negotiate a settlement with its creditors. According to the documents filed in the bankruptcy case, the corporation owed $3.5 billion to its top 50 creditors.

genesis global logo over red image of man in debt

Genesis Global: A Closer Look

## Crypto exchange Gemini in line for the next round of downsizing

In yet another blow to the industry, crypto exchange, Gemini plans to lay off another 10% of its staff to cut back on costs.

The [report](https://www.theinformation.com/articles/gemini-is-laying-off-10-of-staff-marking-latest-blow-for-winklevoss-crypto-startup?utm_content=article_push&utm_medium=organic&utm_campaign=AB_post&utm_term=AB_post) was provided by The Information after it intercepted an internal communication plan meant for Gemini's employees. The message referred to the crypto industry's crisis, as well as some "bad actors" in the industry that caused Gemini to make this decision.

This is the third round of downsizing that Gemini is going through within the past six months, as the crypto exchange is experiencing tough times.

The president of Gemini, Cameron Winklevoss, said the company had hoped to avoid further staff cuts, but that the "persistent negative macroeconomic conditions and unprecedented fraud perpetuated by bad actors in our industry" left it with no choice.

Of course, the party in question was none other than Genesis, and its parent company Digital Currency Group. Due to Genesis' own financial issues and bankruptcy, it has failed to meet obligations to Gemini and the crypto exchange platform's special project, Earn.

Earn is an interest-paying financial instrument that Gemini offers. The finances provided for the lending were covered by the Genesis group. However, due to bankruptcy, it was unable to pay the remainder of the due costs, which – [according to Gemini ](/news/article/winklevoss-claims-genesis-owes-investors)– amounted to around $900m.

There was a back-and-forth between the two entities on social media as well, with [Twitter](https://twitter.com/gemini/status/1592873279232278532?lang=ens) being the main playground for the heated exchange.

## Increasing trend of lay-offs in the crypto industry

Gemini isn't the first crypto exchange or crypto-based company to lay off its employees in the past year. The increasing number of bankruptcies, failures, and downright fraud committed by multiple crypto entities has contributed to a huge crash in the market.

After all these companies inherit losses and find it difficult to cover their expenses, the only stakeholder with a target on its back tends to be the employee.

The mismanagement of funds by upper-level executives is becoming more and more detrimental to not just company employees, but the crypto industry itself.

We wait to see how the market revives – if it does at all – and how much trust skilled workers will have in these crypto entities once again.


red image of employees carrying boxes out of office

Crypto Exchange Gemini Cuts Staff Again 

Genesis Global Capital Inc. has joined the ranks of the FTX contagion victims. The crypto lender has filed for chapter 11 bankruptcy protection in the Manhattan federal court.

It has been struggling since the collapse of FTX in November 2022.

Genesis bankruptcy is a major setback for its parent company, [Digital Currency Group](https://dcg.co/) (DCG). Barry Silbert’s DCG relied on the business of this crypto lender, and now it is likely to face a liquidity crisis. 

According to the insolvency filing, the firm has more than 100,000 creditors. In addition, it has accumulated liabilities of $1 billion-$11 billion. It also includes the liabilities of the clients of the Gemini Earn program.

## Genesis bankruptcy - Official statement

The firm announced the bankruptcy through a [press release](https://www.businesswire.com/news/home/20230119005955/en/) on 19 January. It mentioned that the Chapter 11 filing would only be effective on its crypto lending business. However, its spot trading, derivatives, and brokerage businesses will carry on their operations.

In the official statement, the company announced that it has started "a court-supervised restructuring plan", which will allow it to find "a holistic solution".

The bankrupt lending business claims more than $150 million in liquidity. It plans to use this fund to back up its business operations and to use it for restructuring plans.

## Crypto crisis after the FTX collapse

Since the collapse of the [Sam Bankman-Fried](/news/article/former-ftx-ceo-sbf-arrested) exchange, the industry has been going through a meltdown. FTX contagion spread to several firms, including [BlockFi](/news/article/ftx-collapse-blockfi-suspend-withdrawals), 3AC, [Gemini](/news/article/gemini-crypto-exchange-falls-prey), Salt, and others.
 
Earlier, Genesis paused withdrawals from its customers' accounts. It affected the operations of the lending program of [Gemini and Genesis](/news/article/genesis-gemini-sec-takes-action). These firms are now facing a lawsuit from the Securities and Exchange Commission. Following this situation, it also [laid off 30% of its workforce](https://www.coindesk.com/business/2023/01/05/crypto-lender-genesis-lays-off-30-more-of-its-staff/). 

And now, it has filed for protection from bankruptcy. This could also affect DCG's businesses, as it may cause a further liquidity crisis.


red image of bankrupt newspaper and genesis logo

Genesis Bankruptcy: Crypto Meltdown Continues 

US financial watchdog the SEC (Securities and Exchange Commission) has filed charges against crypto lending firms Gemini and Genesis.

On 12 January, SEC sued the firms over their crypto lending product, Earn, for allegedly breaching investor protection laws.

## The Gemini SEC lawsuit

The [Gemini](https://www.gemini.com/) SEC civil lawsuit has been filed in the Federal Court of Manhattan. As per the SEC, both companies did not register their product before offering them to individual investors. The regulator claims that the Earn program has been used to sell unregistered securities. 

The crypto lending program allowed the exchange’s customers to lend their assets to [Genesis](https://genesistrading.com/) to earn up to 8% interest. The crypto exchange also profited by charging a fee of around 4.29% through this program.

Both these partner firms are under scrutiny after Genesis paused withdrawals unexpectedly in November. Interestingly, it happened right after the FTX exchange crashed. As per the SEC, at that time, the cryptocurrency lending program had more than [$900 million worth of crypto assets](/news/article/genesis-brokers-owes-gemini) of their customers. With this lawsuit, the commission is looking to recover illegal profits and fines for the offence. 

## Tyler Winklevoss's statement on Gemini SEC charges

Soon after the Gemini SEC lawsuit was filed, Gemini’s co-founder, [Tyler Winklevoss](/news/article/tyler-winklevoss-twitter), issued a statement via [Twitter](https://twitter.com/tyler/status/1613674691507679233). He said, "We look forward to defending ourselves against this manufactured parking ticket...".

He also showed his resolve to continue work to recover customers' assets.

On the other hand, Genesis Global Capital is yet to comment on the issue. 

Since the pause of withdrawals, the lending partner has been seeking ways to recover. However, the Wall Street Journal recently reported that the firm might have to file for [Chapter 11 bankruptcy](https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics). The firm has already laid off more than 30% of its workforce in the last week.

Gemini and Genesis have ties with the [fallen exchange](/news/article/gemini-crypto-exchange-falls-prey), FTX, and have been in losses since its decline.



gemini and Genesis logos over red image of US SEC building

Genesis and Gemini: SEC Takes Action

Barry Silbert, the CEO of Digital Currency Group (DCG), has denied employing “bad faith stall tactics” in a duel pitting DCG against the Gemini Exchange’s Cameron Winklevoss, whose firm is trying to retrieve [$900 million](/news/article/genesis-brokers-owes-gemini) of deposits their clients placed with Genesis.

## Clients unable to access their funds

DCG is currently in the crosshairs of the rest of the crypto industry, and [rumors](https://www.bloomberg.com/news/articles/2023-01-06/barry-silbert-s-list-of-crypto-woes-starts-with-genesis-bankruptcy-angst?sref=ZTdRrSmf) about a looming Genesis [bankruptcy](https://www.reuters.com/technology/us-crypto-broker-genesis-says-it-is-working-avoid-bankruptcy-filing-2022-11-30/) and federal investigations are fueling the allegations. 

The contest with Winklevoss gravitates around allegations regarding a loan Barry Silbert extended to Genesis to the defunct crypto hedge fund Three Arrows Capital (3AC): 3AC owed Genesis [more than $1 billion](https://www.coindesk.com/business/2022/07/18/genesis-global-issued-236b-in-undercollateralized-loans-to-three-arrows-capital/) when it tanked last year. As the two crypto entrepreneurs continue bickering, Gemini’s clients have been unable to access their funds for at least six weeks. 

Genesis and Gemini partnered about two years ago. They launched a high-yield crypto product called Earn, through Gemini, that offered up to 8% ROI on customer deposits. Gemini exchange lent funds from Earn to Genesis, which the latter placed on numerous trading platforms and borrowers. The relationship flourished throughout 2020 and 2021 as the crypto market thrived, but matters went haywire in 2022 when the crypto market dithered, causing the Earn model to fall apart. 

Gemini halted all withdrawals last November at the height of the FTX crisis to the chagrin of more than 340,000 of its retail clients, some of whom are seeking legal redress.   

## Barry Silbert is the public face of DCG

Barry Silbert, the public face of DCG, has never shied away from using Twitter or interviews to opine on the crypto market. The career investment banker is among the pioneer investors in blockchain firms around 2013 and established DCG in 2015; the firm has so far invested in more than 200 crypto startups. 

According to [Forbes magazine](https://www.forbes.com/profile/barry-silbert/?sh=530f2a452950), the Emory University’s Goizueta Business School alumnus had a net worth of $3.2 billion and was the eighth-richest crypto investor in April 2022. 

Apart from Genesis, DCG's lending arm, the $10 billion company has a stake in digital asset manager Grayscale besides owning crypto mining firm Foundry Services, trade publication Coindesk, digital asset platform Luno global, and crypto index provider TradeBlock. Apart from its association with the defunct 3AC, Genesis joins the list of firms suffering from FTX [contagion](/news/article/gemini-crypto-exchange-falls-prey) as its derivative business is said to have had over $175 million locked in an FTX trading account.


red image of stock market with Cameron Winklevoss and Barry Silbert

Barry Silbert Rebuts ‘Bad Faith’ Claims

Cameron Winklevoss, co-founder of crypto exchange Gemini Trust Co with his twin brother, accused CEO of Digital Currency Group Barry Silbert of "bad faith stall tactics" on Monday and demanded that he commit to settling $900 million in disputed client assets by 8 January.

## Winklevoss says Genesis owes more than $900 million

In partnership with DCG's crypto company [Genesis](/news/article/genesis-brokers-owes-gemini), Gemini offers a crypto financing product called Earn. Following the bankruptcy of major cryptocurrency exchange [FTX](/news/article/is-crypto-dead) in November, [they froze customer withdrawals](https://www.reuters.com/technology/crypto-broker-genesis-suspend-redemptions-new-loan-originations-tweet-2022-11-16/). 

Winklevoss stated that Genesis owed about $900 million to around 340,000 Earn investors and that he had been attempting to achieve a "consensual resolution" with Silbert for the previous six weeks. 

"Over the past six weeks, we have done all we can to engage with you in good faith and collaboratively in an attempt to seek a consensual settlement for you to return the $900 million that you owe while also assisting you in the preservation of your business," Winklevoss said in his letter. "However, it is now evident that you have been using deceptive delay tactics. 

## Winkelvoss's open letter to Silbert and his response

"However, it is now evident that you have been participating in bad faith delay tactics," Winklevoss stated in a Twitter https://twitter.com/cameron/status/1609913051427524608?s=20&t=belP_IbOFb4yt9f9xIG4Aw to Silbert. "We are asking you to commit to collaborating to fix this problem by 8 January, 2023," he continued.

The letter should have specified what would happen if an agreement with Silbert was reached by 8 January. Winklevoss responded that DCG owed Genesis $1.675 billion, which Genesis owed to Earn users and other creditors, adding that "this disaster is all of your inventions".

In a [tweet](https://twitter.com/BarrySilbert/status/1609926715454771200), Silbert stated that DCG had not borrowed $1.675 billion from Genesis. In his opinion, DCG has never missed an interest payment to Genesis. 

It has no loans outstanding, adding that on 29 December, DCG delivered a proposal to Genesis and Winklevoss' counsel and has yet to get a response.

Genesis said in a letter to clients on [7 December](https://www.reuters.com/technology/crypto-lender-genesis-tells-clients-it-is-working-preserve-their-assets-2022-12-07/) that it was trying to safeguard client assets and increase liquidity, but that it would take weeks rather than days to develop a plan.


red image oc cameron winklevoss with genesis logo

Winklevoss Claims Genesis Owes Earn Investors

The [FTX collapse](/news/article/ftx-collapse-blockfi-suspend-withdrawals) has left Genesis brokers in heavy debt, another example of the spreading contagion from the exchange collapse. According to a [report](https://www.ft.com/content/32977a99-c1c3-4f34-9ecc-4057217bf974) by newspaper the Financial Times, the crypto broker and the [Digital Currency Group (DCG)](https://dcg.co/) owe around $900 million to the Winklevoss twins’ exchange, Gemini. 

DCG is a venture capital company that owns Grayscale asset manager and [Genesis brokerage](/news/article/genesis-crypto-claim). Last month, its founder, Barry Silbert, addressed the company's shareholders about market turmoil in a letter. It shared that the company owes more than $575 million to the brokerage's lending arm.

The borrowed amount was to be used for new investment opportunities and was due in May 2023. The loan was taken when DCG assumed control of Genesis Trading after the default of [Three Arrows Capital (3AC)](https://www.threearrowscap.com/).

## Gemini seeking to recover its customers’ funds

Genesis brokers and Gemini crypto exchange worked together for a digital asset lending program called Earn. The debts affected its operations, and it halted withdrawals from customers’ accounts. Now, Gemini has set up a creditors committee that will make efforts to retrieve the funds from DCG and its subsidiary, crypto lender.

Currently, a creditor group is in talks with the company about $1.8 billion worth of loans. Another creditor group, accounting for $900 million, is taking advice from the law firm [Proskauer Rose](https://www.proskauer.com/). 

## Genesis brokers may file for bankruptcy

Genesis Global Capital is likely to file for bankruptcy. However, the firm has acquired the services of investment bank Moelis to explore its options. On 16 November, the firm suspended withdrawals from customer accounts. The initiative was taken after the sudden decline of the Sam Bankman-Fried exchange, FTX.

The suspension also triggered an unexpected outage for the [Gemini exchange](/news/article/gemini-crypto-exchange-falls-prey). The overall operations of the crypto exchange are being affected due to the spread of FTX contagion.


Genesis Brokers Owes $900 Million to Gemini

The[ Bitcoin](/news/article/feds-seize-bitcoin-stolen-crypto-scam) market faces volatility issues as FTX's downfall hits another crypto company, Genesis.

## Genesis Global Trading halts withdrawals and new loan originations

Grayscale Bitcoin Trust, the largest Bitcoin fund, dropped 7% on Wednesday as investors dumped more digital assets following the high-profile collapse of crypto exchange FTX last week.

Genesis Global Trading, a cryptocurrency investment bank, tweeted that the company was [temporarily halting withdrawals and new loan originations services](https://www.independent.co.uk/tech/bitcoin-price-genesis-crypto-latest-b2226380.html) because of FTX's fall.
 
![genesis crypto tweet](https://s3.eu-west-2.amazonaws.com/prod-monitalks-media/genesis1_720fa9e138.webp)

[Genesis](https://twitter.com/GenesisTrading), the most recent victim of FTX volatility, is owned by Digital Currency Group (DCG), which also owns Grayscale.

DCG tweeted that the freezing of Genesis' lending business did not affect the company or its wholly-owned subsidiaries.

Grayscale stated that its products would continue to be fully operational, and its underlying assets would be unaffected. Genesis said that it was working to prevent the same fate as FTX.

The company stated that it had hired the best advisors in the business to explore all potential options.

Further, in a tweet, the company said, "We will deliver a lending business plan next week." The crypto firm claimed that it is working tirelessly to figure out the best lending solutions, including, among other things, sourcing new liquidity.

## Bitcoin volatility

Following the news on Wednesday, the price of Bitcoin fell even further, with the cryptocurrency now trading just for $16.5K.

Bitcoin volatility has seen the value fall by more than 75% since reaching an all-time high of around $69,000 in November 2021. 

Following the collapse of FTX, Bitcoin volatility saw the price fall below $16,000 for the first time since November 2020, after several months of stability.

## Impact of FTX collapse

The collapse of [FTX](/news/article/what-is-ftx) shook the volatile cryptocurrency market, which lost billions of dollars in value.

The consequences of the company’s sudden collapse will probably affect cryptocurrencies for a very long time to come and may even cause broader market declines. Many crypto firms are severely affected by the company's[ bankruptcy news](/news/article/ftx-bankrupt-who-to-blame).


Bitcoin Volatility: Price Drops to $16.5K 

It seems the crypto brokerage Genesis filed the claim against the bankrupt crypto hedge fund Three Arrows Capital (3AC) which allegedly owes it $1.2 billion. 

Genesis is not the only creditor who filed the claim. According to the sources familiar with the situation, co-founder of 3AC Zhu Su submitted $5 million claim, while Chen Kaili Kelly, the wife of another 3AC co-founder, Kyle Davies, filed a $66 million worth lawsuit.

Also, faltered crypto companies [Celsius Network](/news/article/celsius-bankruptcy-protection) and Voyager Digital are among others who lent money to Three Arrows. A crypto derivatives exchange Deribit also filed an $80 million claim.

Genesis Asia-Pacific earlier has confirmed its exposition to Three Arrows. On July 9 filing in Singapore, high court revealed there was a $2.36 billion loan to the fund. Genesis CEO, Michael Moro recently [tweeted](https://twitter.com/michaelmoro/status/1544733041045786626) about the whole situation admitting the loans to Three Arrows “had a weighted average margin requirement of over 80%." According to Moro, "once they were unable to meet the margin call requirements, we immediately sold collateral and hedged our downside”.

## Genesis reveals crypto Ponzi scheme

The company confirmed that since then, it has been collaborating with Digital Currency Group to find the optimal strategy for isolating the risk further. 

“DCG has assumed certain liabilities of Genesis related to this counterparty to ensure we have the capital to operate and scale our business for the long-term,” Moro said.

He added that both the DCG and Genesis balance sheets remain stable and that there is no remaining exposure to Three Arrows Capital.

There is still a legal question here of how a co-founder could at the same time be a creditor to his own company. It all adds up to the Ponzi scheme where old investors are funded with money from the newcomers.

When looking at the filings, it was reiterated that “3AC is insolvent and should be wound up” in different words. 

In an affidavit filed June 26, Charles McGarraugh, Blockchain.com’s Chief Strategy Officer, claimed that Kyle Davies wanted to borrow another 5,000 Bitcoin from Genesis, valued at approximately $125 million at the time. He said the reason for credit was “to pay a margin call to another lender.” 

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