Crypto Brokerage Genesis Global Capital May Be Nearing Bankruptcy Filing: Reports

The collapse of FTX in late 2022 may have been the final straw for Genesis, which earlier that year reportedly suffered losses of several hundred million dollars due to its exposure to failed crypto hedge fund Three Arrows Capital.

AccessTimeIconJan 18, 2023 at 6:54 p.m. UTC
Updated May 9, 2023 at 4:06 a.m. UTC

Genesis Global Capital, the institutional crypto brokerage whose lending unit halted customer withdrawals in the aftermath of FTX's failure, is laying the groundwork for a bankruptcy filing, according to reports.

Bloomberg reported Genesis is in confidential negotiations with various creditor groups, with the company warning it could seek bankruptcy protection if it fails to raise capital.

The Block reported Genesis is in talks with creditors about a prepackaged bankruptcy plan, which would mean that the two sides would come to a restructuring agreement prior to any filing and that the deal would be then be made final in bankruptcy court.

Since the collapse and bankruptcy of crypto exchange FTX in November, Genesis has been scrambling to raise fresh capital or reach a deal with creditors. The company's institutional lending unit had been forced to suspend redemptions and new originations as a result of the FTX implosion. Plus, Digital Currency Group (DCG) its parent company, has come under increasing pressure to make good on $900 million of locked deposits. Genesis late last year retained investment bank Moelis & Co. to assist with exploring options.

Earlier in 2022, Genesis saw its $2.4 billion loan to hedge fund Three Arrows Capital go bust after Three Arrows collapsed because of its exposure to the Terra network, whose token and stablecoin plunged in value.

DCG is also the parent company of CoinDesk.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Nelson Wang

Nelson Wang was CoinDesk's news editor for the East Coast. He holds BTC and ETH above CoinDesk's disclosure threshold of $1,000.