Digital assets brokerage Genesis can become the next big crypto player heading for bankruptcy in the aftermath of FTX collapse, Bloomberg reported Thursday. The company has been struggling to raise fresh cash to avoid the liquidity crunch after seeing $175 million stuck in limbo at the FTX trading account.
In November, Genesis warned potential investors that bankruptcy remains a viable option should its efforts to secure fresh funding fail. The company has been reportedly in talks with Binance over emergency financing — which apparently fell through.
Read also: Gemini customers request class action arbitration against Genesis and DCG
Digital Currency Group, Genesis’ parent company, recently found itself under fire from Cameron Winklevoss, a co-founder of cryptocurrency exchange Gemini. When Genesis’ lending arm halted redemptions and new loan originations in November, it locked up about $900 million belonging to customers of Gemini Earn, a high-yield investment product that let Gemini’s users earn interest on their digital assets through Genesis.
In an open letter to DCG CEO Barry Silbert, Cameron Winklevoss accused him of defrauding Gemini’s customers and concealing Genesis’ insolvency, calling on DCG’s board to oust Silbert. The company’s CEO denied the accusations.
Digital Currency Group is a multibillion global enterprise that actively invests in promising blockchain and crypto companies across the world, with some 200 million investments in 35 countries worth about $500 million. The company has five core subsidiaries — crypto brokerage firm Genesis, digital asset manager Grayscale, mining operations company Foundry, crypto exchange Luno, and media platform CoinDesk.
CoinDesk, a crypto media that broke the scoop that led to FTX’s demise, confirmed that it is weighing a partial or full sale amid a deepening crisis at its parent company. The publication has hired investment bank Lazard as an advisor to explore all possible options to remove itself from Silbert’s DCG.
