Home » End of the road for Genesis? The company could declare bankruptcy this week

End of the road for Genesis? The company could declare bankruptcy this week

by Tim

The end of a slow wreck? The lending firm Genesis, which has been in trouble since the FTX affair, is reportedly finally preparing to declare bankruptcy. The situation comes after a series of fights between the company’s CEO and the Winklevoss brothers, who run the Gemini platform.

Genesis’ descent into hell

It can’t be said that this is entirely a surprise to the ecosystem. Signs of the firm’s trouble have been mounting since last November, when it was revealed that Genesis was suffering a liquidity crisis. One of the triggers was the $175 million that was tied up in FTX, the failed platform that collapsed in the same month.

Since then, it has become known that Genesis owes $900 million to the exchange platform Gemini, founded by the Winklevoss brothers. The two companies are partners in the “Gemini Earn” programme, which allowed users to earn up to 8% interest by locking in their cryptocurrencies. It was suspended last November.

This has led to a particularly public dispute between Barry Silbert, the CEO of Digital Currency Group (DCG), and Cameron Winklevoss, the CEO of Gemini. DCG owns heavyweights in the ecosystem, including Grayscale and the media company CoinDesk. On Twitter, these two central figures did not hide their battles, one blaming the other for not being able to pay him back:

One of the latest signs of a coming bankruptcy was the dismissal of 30% of Genesis’ staff on 6 January. This followed a previous layoff of 20% of its staff last summer.

Genesis to go bankrupt soon

According to Bloomberg, sources close to the case say Genesis could file for bankruptcy this week. The company’s discreet negotiations to find a financial solution have not been successful, and the company’s back is against the wall. Digital Currency Group reportedly announced two days ago that quarterly shareholder dividends were being suspended in order to conserve cash.

The solution of selling the company (partially or totally) is also being considered, and Lazard has come in to offer advice to Genesis. In any case, the wreckage seems almost inevitable, especially since Gary Gensler and the SEC have confirmed that the US regulator is investigating both entities for non-compliance with federal securities laws. So it’s one more collateral victim of the FTX affair that could fall this week.

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