The cryptocurrency industry has seen its fair share of ups and downs, with many companies rising to the top and just as many falling by the wayside. One such company that has recently fallen on hard times is Genesis Global Trading, a leading cryptocurrency lender and trading platform. The company’s downfall was triggered by the collapse of the major cryptocurrency exchange FTX in November, which caused a ripple effect among other companies in the industry.
The Impact of FTX’s Collapse
As the crypto market began to experience a significant downturn in November, FTX, one of the largest crypto derivatives exchanges, faced a liquidity crisis. This led to the exchange’s decision to halt trading and withdrawals for several hours, causing panic among investors and traders. The ripple effect of this crisis was felt throughout the industry, with many companies, including Genesis, being forced to freeze customer redemptions on November 16.
The domino effect of the FTX crisis was not limited to just Genesis. Other companies in the crypto sector, such as crypto lender BlockFi and Core Scientific Inc, one of the largest publicly traded crypto mining companies in the United States, were also forced to file for bankruptcy protection in the following months.
Failed Negotiations and Legal Disputes
According to a Bloomberg report, Genesis, its parent company Digital Currency Group, and its creditors have been in negotiations for a resolution, but have so far failed to reach an agreement. The report also mentioned that legal firms Kirkland & Ellis and Proskauer Rose have been providing advice to groups of creditors.
In addition to its financial struggles, Genesis is also currently locked in a legal dispute with Gemini, a cryptocurrency exchange founded by twin entrepreneurs Cameron and Tyler Winklevoss. Gemini collaborated with Genesis to launch a crypto lending product known as Earn but now claims that Genesis owes them $900 million in relation to this product. The SEC recently accused both Genesis and Gemini of unlawfully selling securities to a vast number of investors via their crypto lending program.
The Future of Genesis
The lending division of Digital Currency Group (DCG) may submit paperwork as early as this week for a bankruptcy filing for Genesis. The expected bankruptcy filing of Genesis Global Trading has been looming for weeks, and it is unclear what the future holds for the company and its customers.
The cryptocurrency industry is known for its volatility, and companies that operate within it are often at the mercy of market conditions. The collapse of FTX in November and the subsequent ripple effect it had on other companies in the industry is a prime example of this. Genesis Global Trading, a leading cryptocurrency lender and the trading platform was one of the companies affected, and its downfall has resulted in financial struggles and legal disputes. The future of Genesis is uncertain, and it remains to be seen how the company will move forward.