Crypto Lender Genesis Fails, Files for Bankruptcy

Crypto lender Genesis files for bankruptcy

Cryptocurrency lender Genesis has filed for bankruptcy.

US regulators at the Securities and Exchange Commission (SEC) recently said that the company sold cryptocurrency in a way that was against the law.

It is a part of the Digital Currency Group (DCG), a group of more than 200 businesses that all deal with crypto.

Genesis’s bankruptcy is related to the bankruptcy of FTX, which happened last November after fraud allegations.

Genesis was first set up as a Bitcoin trading desk that let people trade large amounts of crypto “over the counter.”

Crypto Lender Genesis Fails: Files for Bankruptcy

It said earlier this month that it would lay off 30% of its staff, which would leave it with 145 workers.

In a statement, Genesis interim CEO Derar Islim said, “We look forward to continuing our talks with DCG and our creditors’ advisers as we try to find a way to maximize value and give our business the best chance to be well-positioned for the future.”

Ripple effect

Three Arrows Capital, another cryptocurrency company, went out of business in June last year, hurting Genesis.

It said that Three Arrows owed it $1.2 billion (£971 million) because the collapse of cryptocurrencies Luna and TerraUSD in May had caused Three Arrows to fail.

It is the latest in a string of bad news for the industry. Some analysts have called the drop in value of cryptocurrencies the “crypto winter.”

Continuing effects

Genesis is also in a public fight with Gemini, owned by the Olympic rowers Cameron and Tyler Winklevoss. The fight is about what will happen to $900 million in assets that Gemini customers put with Genesis.

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Investors were pitched Gemini Earn as a method to make up to 7.4 percent per year on their cryptocurrency holdings.

Since Genesis stopped withdrawals in November because of the crypto market volatility, about 340,000 Earn users have been unable to get to their money.

Last week, the SEC said that Genesis and Gemini were selling crypto assets to investors in a way that was against the law. The Winklevoss twins said they were excited to defend the lawsuit, but DCG hasn’t said anything yet.

Soon after Genesis filed for bankruptcy, Cameron Winklevoss sent out a tweet.

The bankruptcy filing is another blow as the effects of FTX’s collapse is still being felt.

Sam Bankman-Fried, the company’s founder, is accused of fraud because he took money millions of customers put on his FTX platform and sent it to a hedge fund without their permission.

In December, the 30-year-old was sent back to the US from the Bahamas, where FTX was based. He was charged with stealing money from customers and investors, but he pleaded not guilty in court.

He was let go on $250 million bail and denied the accusations.

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