TOPLINE
Yet another major cryptocurrency player is in serious danger of going under, as sources told the Wall Street Journal the embattled lender Genesis is weighing filing for bankruptcy, while the firm said Thursday it had drastically reduced its headcount.
KEY FACTS
Genesis laid off 30% of its employees, a person familiar with the matter told Forbes, matching an earlier report from CoinDesk, which along with Genesis is also owned by one-time billionaire Barry Silbert’s Digital Currency Group (Genesis didn’t immediately respond to Forbes’ request for comment).
Though Genesis has yet to publicly indicate it will file for bankruptcy, its outlook is bleak: The firm suspended withdrawals from its lending unit November 16 and has not unveiled a plan to resume withdrawals in the seven weeks since.
Genesis owed creditors $1.8 billion as of December, a person familiar with the matter told Forbes at the time.
KEY BACKGROUND
The disclosure comes the same day as leading crypto bank Silvergate Capital’s disclosure of $8.1 billion in net withdrawals over the last three months of 2022. Genesis had lent $2.4 billion to the Three Arrows Capital crypto hedge fund that went insolvent in June, and Genesis saidin November that it had $175 million in funds locked on its FTX accounts but had no outstanding loans to FTX or Alameda Research, the firms founded by the billionaire turned pariah Sam Bankman-Fried.
SURPRISING FACT
Genesis would join a long list of one-time crypto giants in bankruptcy: Alameda, BlockFi, Celsius, FTX, Three Arrows and Voyager all filed for insolvency last year.
TANGENT
Cameron Winklevoss, the billionaire president of the crypto exchange Gemini wrote a scathing open letter to Silbert Wednesday, accusing him of engaging in “bad faith stall tactics” regarding Gemini’s outstanding $900 million loan to Genesis, allegations Silbert subsequently denied.
FORBES VALUATIONS
We estimate Silbert, worth $3.2 billion as of last April, to now be worth $0, largely due to Genesis’ mountain of debt. The Winklevoss twins are each worth $1.1 billion, according to our estimates, down from $4 billion apiece in April 2022 as the crypto industry tumbled.
FURTHER READING
Crypto Lender Genesis Suspends Withdrawals: FTX Collapse Created ‘Unprecedented Market Turmoil’ (Forbes)
Silvergate Stock Crashes Nearly 50% As Bank Grapples With Crypto Crisis (Forbes)
By Derek Saul, Forbes Staff