Genesis Global Holdco LLC, the parent company of troubled cryptocurrency lender Genesis Global Capital, filed for Chapter 11 bankruptcy protection late Thursday after being pummeled by two of 2022’s biggest industry collapses, those of hedge fund Three Arrows Capital and exchange FTX. In its filing, Genesis Global Capital, the partner firm of Gemini’s defunct interest-bearing Earn program, estimated it has more than 100,000 creditors and between $1 billion and $10 billion in liabilities, as well as assets. Genesis owes over $3.5 billion to its top 50 creditors, including crypto exchange Gemini, trading giant Cumberland, investment firm Mirana, MoonAlpha Finance and VanEck’s New Finance Income Fund. Genesis and CoinDesk are both owned by Digital Currency Group, or DCG.
Genesis Trading, modified by CoinDesk
Gemini CEO Cameron Winklevoss threatened to sue DCG CEO Barry Silbert over the repayment of a $900 million loan in a tweet published just minutes after Genesis filed for Chapter 11. The tweet comes after Winklevoss waged a Twitter war against DCG to recover the loan amid his exchange’s own struggles. Winklevoss called Genesis’ bankruptcy a “crucial step” toward recovering Gemini users’ assets. But, he still intends to sue Silbert and Genesis’ parent company, DCG, unless Silbert makes a “fair offer” to DCG’s creditors.
Bitcoin rose 1% to around $21,000 over the past 24 hours after the Genesis bankruptcy news hit the wires. Ether rose 2% to $1,545, CoinDesk data shows. Traders weren’t surprised by bitcoin’s and ether’s resilience following the news. “The market appeared to expect the Genesis bankruptcy filing for the last 48 hours as the GBTC discount suddenly widened again. With Genesis filing for bankruptcy, this removes a negative overhang from the market, and crypto investors can finally focus on fundamentals,” Markus Thielen, head of strategy and research at crypto-services provider Matrixport, said, referring to the Grayscale Bitcoin Trust, a fund that tracks the price of bitcoin. Grayscale is owned by DCG.
Market Insight: SOL’s on a Roll
Danny Nelson/CoinDesk
SOL, the native currency of the Solana blockchain, has doubled its price since mid-December to hover at around $21, reaching as high as $24 earlier this week, roughly where it stood before investors started fretting over its entanglement to beleaguered crypto exchange FTX and FTX’s sister company Alameda Research. Over the past week alone, SOL has risen 22%, and it is up 114% this year.
The surge started after a favorable tweet by Ethereum co-founder Vitalik Buterin, who expressed “hope” that the Solana community “gets its fair chance to thrive,” shortly after SOL had plunged to a record low of $8.19. Buterin’s comment headed off damage from reports that the token was the second-largest holding of Alameda, the trading arm of FTX whose unruly balance sheet sparked FTX’s descent into bankruptcy protection, although SOL had already declined significantly prior to the FTX revelation.
“The conditions are ripe for a breakthrough in 2023 that could catalyze a new bull market. We are excited by the growth of layer 2 solutions, the development of ZK-rollups and privacy solutions, and many other emergent capabilities of crypto,” Bitwise’s analysts led by Chief Investment Officer Matthew Hougan wrote in a review of the fourth quarter.
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