Poor cryptocurrency valuations and continued fallout from FTX's downfall left Genesis unable to pay its creditors.
Genesis, one of the largest crypto lending firms in the space finally filed for Chapter 11 bankruptcy on Friday. Though Genesis managed to cling on to life for months longer than some of its largest competitors, recent market shake-ups and festering fallout from FTX's collapse flung it over the edge. Now, the firm will join Celsius, Voyager Digital, and BlockFi in a graveyard of former crypto giants.
Genesis was among the crypto firms offering sky high returns on cryptocurrency investments. The company lent funds to some of the shadiest names in the space, including failed crypto hedge fund Three Arrows Capital and FTX affiliate Alameda Research. In the latter example, Genesis reportedly gave out hundreds of million worth of unsecured loans to Alameda. Genesis' parent company, DCG, now reportedly owes creditors around $3 billion, according to CNBC. The bankruptcy filing comes just a week after the Securities and Exchange Commission charged Genesis with allegedly selling unregistered securities.
[...] While Genesis, like just about every other company in the crypto space, struggled to adapt to worsening cryptocurrency valuations and diminished consumer trust, the public response to FTX's implosion likely accelerated the company' downfall. FTX's death spiral sparked a new wave of crypto customers sprinting to withdraw their funds. Genesis reportedly sought out a $1 billion bailout during this time to stop the bleeding but nobody answered the company's call.