A wallet linked to Genesis Trading, a cryptocurrency lending institution owned by conglomerate Digital Currency Group. According to blockchain data provider Arkham Research, it moved 16,000 bitcoins (worth $1.1 billion) and 166,000 ethers (worth $521 million) on Friday, which would seem to indicate that Genesis Trading will begin repaying its creditors after the 2022 implosion..
This comes just over a year after Genesis agreed to repay $1.5 billion to clients of cryptocurrency exchange Gemini. Gemini used Genesis to earn returns on crypto deposits made by Earn clients, which Genesis then lent to the now-bankrupt Three Arrows Capital hedge fund.
Gemini announced in May that Earn users had received all their digital assets back in kind, meaning Genesis could repay its remaining creditors. In a January 2023 court filing, Genesis listed claims of more than $3 billion from its top 50 creditors, including Gemini, trading giant Cumberland, and VanEck’s New Finance Income Fund.
Closing the chapter
Friday’s move could mark the end of a long and ugly chapter in the cryptocurrency industry, which has been rocked by the failure of several major companies during the 2022 market downturn.
The contagion that started with the collapse of the multi-billion dollar stablecoin project Terra has taken down several highly leveraged companies like 3AC and Celcius, ultimately leading to the bankruptcy of FTX and Genesis Global. These failures have highlighted just how intertwined and vulnerable the industry has become during the pandemic bull market.
Genesis said in its January 2023 bankruptcy filing that it had more than 100,000 creditors and could be as much as $10 billion in debt. It’s unclear where Friday’s transfer is headed. Genesis did not respond to a request for comment by press time.
The company’s restructuring and repayment process was further complicated by parent company DCG issuing Genesis a $1.1 billion promissory note (essentially an IOU payable in 2032). This promissory note was primarily used to plug a massive hole in the balance sheet caused by losses at 3AC and later FTX sister company Alameda Research.
New York Attorney General Letitia James filed a civil lawsuit in October 2023 against DCG, Genesis, Gemini and many of its executives, accusing them of concealing $1 billion in trading losses and defrauding investors with “corporate pretense” that concealed Genesis’s insolvency. Genesis closed its withdrawal in November 2022.
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