Cryptocurrency chaos as Genesis files for bankruptcy and DCG halts ... - TechHQ

In a letter to shareholders released on January 17, the Digital Currency Group (DCG) announced it will halt dividends amidst financial issues. The venture capital firm owns a stake in more than 200 cryptocurrency projects and in the letter states that the move is “strengthening our balance sheet by reducing operating expenses and preserving liquidity.”
The cryptocurrency sector is a house of cards: one slip and there’s a stream of collapse. DCG’s issues stem from one of its subsidiaries, Genesis Global Trading, which owed creditors over $3 billion. Cameron Winklevoss is calling for Barry Silbert to be removed as Genesis CEO.
In an open letter posted on January 10, on behalf of his exchange Gemini, Winklevoss said that Silbert and Genesis Global Capital had defrauded more than 340,000 users who were part of Gemini’s Earn program. For the same program, Gemini is owed $900 million that was lent to Genesis.
The Earn program was initially a joint venture and, somewhat ironically, two days after Winklevoss’s letter the US Securities and Exchange Commission (SEC) charged both firms with offering unregistered securities.

In a press release, SEC Chair Gary Gensler said that “today’s charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws. Doing so best protects investors. It promotes trust in markets. It’s not optional. It’s the law.”
Today, January 20, Reuters reported that Genesis filed for US bankruptcy protection from creditors late on Thursday. Things started going wrong for Genesis in 2022, with the cryptocurrency trading firm having to halt withdrawals on November 16 last year after the collapse of FTX and arrest of its founder, Sam Bankman-Fried. According to the cryptocurrency lender, “unprecedented market turmoil” had caused “abnormal” levels of withdrawals.
Shortly before the collapse of FTX, Genesis had revealed it had $175 stuck on the cryptocurrency exchange and hedge fund. DCG had to bail its subsidiary out.
Previously, Genesis had extended $130.6 billion in cryptocurrency loans. One of their biggest borrowers was cryptocurrency hedge fund Three Arrows Capital (3AC). When it was forced into liquidation in June 2022, then CEO Michael Moro announced on Twitter that Genesis took a substantial hit. The liabilities related to 3AC were also assumed by DCG.
As DCG flails, the founders of the now defunct 3AC, Su Zhu and Kyle Davies, are setting out to fundraise $25 million to start a new cryptocurrency exchange.

The Block reported that the pitch desk said the new exchange will enable depositors to transfer FTX claims and receive immediate credit in a token called USDG. The exchange will be called GTX and was introduced on one pitch desk with the line “because G comes after F.”
With GTX, it seems that Zhu and Davies intend to rebuild the tower of cards, instating this new venture at the top. Partnering with the founders of CoinFlex, Mark Lamb and Sudhu Arumugam, GTX is aiming to launch as soon as possible – even as early as February. It is estimated that the claims market is worth around $30 billion.
Molly Loe
@TechHQ
molly@hybrid.co
20 January 2023
20 January 2023
20 January 2023

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