February 9, 2023

Cryptocurrency lender Genesis Global Holdco filed for bankruptcy late Thursday, the latest cryptocurrency firm to file for bankruptcy following the collapse of FTX, an exchange founded by Sam Bankman-Fried.

A year ago, Genesis and a handful of other big lenders lured millions of customers with the promise that they could deposit their crypto assets and earn sky-high returns. But Genesis’ bankruptcy filing makes it the fourth major cryptocurrency lender to fail since last spring, when a downturn in the digital asset market sent prices tumbling. Other major lenders that have collapsed include Celsius Network and Voyager Digital, whose customers lost billions in deposits.

Genesis survived longer, but suffered from the implosion of FTX.In November, the company said it would freeze withdrawals, citing “market turmoil” As a result of the bankruptcy of Mr. Bankman-Fried’s business.

The company’s filing with the Bankruptcy Court for the Southern District of New York involves three entities — Genesis Global Holdco and its two subsidiaries, Genesis Global Capital and Genesis Asia Pacific.

Genesis is a subsidiary of Digital Currency Group, which was founded in 2015 by Barry Silbert. Mr. Silbert’s management and Genesis’ troubles have recently brought him into conflict with two other prominent cryptocurrency executives, Cameron and Tyler Winklevoss, who run the exchange Gemini.

Last week, the SEC charged Genesis with partnering with Gemini to offer unregistered securities. SEC Chairman Gary Gensler said at the time that Genesis and Gemini bypassed “disclosure requirements designed to protect investors.”

Winklevosses have Publicly accused DCG, the parent company of Genesis, procrastinating to preserve funds belonging to their clients. They also allege that DCG and Genesis misrepresented financial information and misrepresented the value of the company’s assets, giving the impression that Genesis was in better health than it actually was.

The SEC’s charges against Genesis and Gemini are part of a broader crackdown on cryptocurrency lenders. Last February, the SEC announced a $100 million fine against cryptocurrency lender BlockFi. BlockFi filed for bankruptcy in November, becoming one of the first big victims of the FTX debacle.

Earlier Thursday, the SEC announced a $45 million settlement with another crypto lending firm, Nexo, for violations of securities laws.

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