Genesis’ Exit: Crypto Lender Shuts Down All Trading Operations

In a dramatic turn of events, Genesis, the now-bankrupt crypto lender, has brought its entire crypto trading venture to an abrupt halt. The decision to cease all trading operations, including its international spot and derivatives trading services, has occurred amid legal disputes involving FTX and Gemini.

Genesis Global Trading, a subsidiary of Genesis Global, recently announced its plans to close U.S.-focused spot crypto trading operations by the end of this month, a report by Coindesk indicated. GGT will cease its over-the-counter trading platform's operations on September 18, 2023.

While Genesis Global Trading is winding down its U.S. operations, Gensis Global Capital International Limited (GGC), another trading-focused entity affiliated with Genesis, will reportedly continue operating GGT's spot and derivatives trading services. GGT was one of Genesis Global's subsidiaries that escaped the conglomerate's bankruptcy.

Genesis' Legal Disputes with FTX

Genesis Global's recent troubles involved a dispute with the now-bankrupt cryptocurrency exchange, FTX, which claimed that Genesis owed it a staggering USD $2 billion. About two weeks ago, Finance Magnates reported that FTX had agreed to settle its claims dispute with Genesis by accepting a payment of USD $175 million to Alameda Research, its affiliated crypto hedge fund.

This agreement offered the potential for substantial recoveries, ranging from 70% to 90% in USD equivalent for unsecured creditors. Genesis faced instability following FTX's collapse and its eventual bankruptcy filing earlier this year.

In an effort to address existing liabilities, Digital Currency Group, (DCG) which is also Genesis' parent company, has devised a strategic repayment plan. The lending platform has a substantial unsecured loan totaling approximately USD $630 million that was due in May 2023 and an additional USD $1.1 billion under an unsecured promissory note that matures this year.

Ongoing Legal Disputes with Gemini

In addition, Genesis has an ongoing legal dispute involving Gemini's allegations of fraudulent activity. Gemini sued DCG and its CEO, Barry Silbert, in July, contending that both parties were involved in 'encouraging and facilitating' fraudulent activity through Genesis.

In response, DCG dismissed these claims as baseless and defamatory, asserting that they were orchestrated as a 'publicity stunt' by Gemini's Co-Founder, Cameron Winklevoss.

Genesis found itself in financial trouble when it filed for bankruptcy protection in New York following the collapse of Three Arrows Capital (3AC) and FTX. According to the Ad Hoc Group, Genesis faced significant exposure of $2.3 billion to 3AC, which was subsequently reduced to $1.2 billion after the collateral was liquidated.

GGC primarily catered to institutional clients and boasted a substantial $2.8 billion in active loans as of the end of the third quarter of 2022. The firm temporarily suspended customer withdrawals and new loan originations last year.