Genesis to Declare Bankruptcy Soon While DoJ to Announce Major International Crypto Enforcement Action – Bitcoin Drops
Bloomberg reports that Genesis may be getting ready to declare bankruptcy. The troubled crypto lender has been under the shadow of insolvency for weeks, following the credit crisis that has hit the crypto industry.
Genesis was one of the largest lenders in the space, often acting as a third-party for other lending outfits promising yields way above anything available in the traditional financial markets.
Bloomberg reports that people familiar with the discussions taking place between Genesis, a unit of the Digital Currency Group, and it creditors suggest that bankruptcy could be declared as soon as this week.
DCG is the nearest thing that crypto has to a conglomerate and in other news DCG has suspended its quarterly dividend distribution until further notice.
Contagion fears – Will DCG and Genesis survive
Genesis creditors include the depositors with the Earn lending product promoted by the Gemini exchange, owned by the WInklevoss twins.
The Winklevoss’s and Barry Silbert, the CEO of DCG have been indulging in a very public spat that has seen the twins accuse Silbert of stalling on paying back $900 million to Earn depositors.
Other large creditors includeDutch-based crypto exchange Bitvavo which is owed $280 million.
Genesis’s credit crunch is rooted in the collapse of crypto hedge fund Three Arrows Capital and its troubles were further compounded by the collapse of FTX.
Genesis suspended withdrawals in November last year.
A letter to DCG shareholders dated 17th January will heighten worries about the contagious impact of Gensis on the rest of the group. DCG has venture nivestment in more than 150 other crypto firms of varyinig sizes.
In the letter notifying shareholders of the suspension of dividends until further notice, Silbert said ““strengthening our balance sheet by reducing operating expenses and preserving liquidity,””.