It’s happened again, folks. Another bankruptcy is in the crypto books. This time, the company that’s falling victim to alleged bankruptcy proceedings is Genesis, the crypto lending unit of the Digital Currency Group that has worked heavily with Gemini, a crypto exchange in New York run by the Winklevoss Twins.
It Looks Like Genesis Will File for Bankruptcy
The company is complaining of a “liquidity crunch” in recent posts. Does that sound familiar? If not, it should. This is exactly what Sam Bankman-Fried complained about before FTX went down the tubes, suggesting that perhaps Genesis might have had some tricks up its sleeve at one point. While nothing is proven, the fact that both these entities suffered from the same thing and that FTX eventually went on to become the fraud haven it’s now known as is hair-raising and suspicious.
In any case, it doesn’t look like Genesis has filed the necessary bankruptcy paperwork yet but is simply laying down the grounds for the bankruptcy it’s planning to enter in the next few weeks. The company says the decision has been coming for some time, and that things have simply gotten too tough and too rigid for the firm to stay afloat.
In early January, it turns out that Genesis laid off about 30 percent of its staff, another nasty trend that’s been occurring over the past few weeks. Other crypto firms – such as Kraken – have also had to let various staff members go as it appears there are still many companies dealing with the aftermath of the 2022 bear market.
Volatility and speculation were at all-time highs during that period. Bitcoin – the biggest and most popular cryptocurrency in the world – fell by more than 70 percent. When it first rose to its largest price of $68,000 per unit in November of 2021, everyone felt that the currency had reached a pinnacle and that nothing could bring it down ever again, but they were wrong.
The asset dropped to the mid-$16K range just one year after that. It was a sad and ugly sight to see, and the crypto space wound up losing more than $2 trillion in overall valuation. While things have turned around slightly in recent weeks (BTC is now trading at $21K), it will take a while before the industry is truly back on its feet.
This Keeps Happening!
2022 was also a year marred by multiple bankruptcies. Some of the names that come to mind include lending network Celsius, Voyager Digital, and crypto hedge fund Three Arrows Capital, though it’s now likely everyone thinks of FTX first and foremost when discussing crypto-related bankruptcies.
Following the filing, news got out that SBF used customer funds to invest in Bahamian real estate. He was later arrested and is now awaiting trial for fraud.
