Genesis is a cryptocurrency intermediary for institutional investors, with

Digital Currency Group Digital Currency Group Inc. (DCG) is a venture capital company focusing on the digital currency market. It is located in Stamford, Connecticut. The company has the subsidiaries Foundry, Genesis, Grayscale Investments, and Luno. It also formerly o ...

(DCG) as its parent company. Genesis operates several businesses, including Genesis Global Trading, Inc. ("GGT"), Genesis Global Capital, LLC ("GGC"), Genesis Asia Pacific Pte. Ltd. ("GAP"), GGC International Limited ("GGCI"), and Genesis Custody Limited ("Genesis Custody"). Genesis Trading provides over-the-counter (OTC) trading services for large-volume digital assets transactions. Genesis' lending business offers institutional lending services to clients who want to borrow or lend digital assets. Genesis filed for

Chapter 11 bankruptcy Chapter 11 of the United States Bankruptcy Code ( Title 11 of the United States Code) permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, w ...

on January 19, 2023, to request court protection to reorganize its digital assets lending and borrowing business.

History

Founded in 2013, Genesis Global Trading, Inc. operates as a subsidiary of the

, a venture capital company founded by

Barry Silbert Barry Silbert is an American entrepreneur and investor who is the CEO of the Digital Currency Group. As of 2022, he was estimated to have a net worth of $3.2 billion. Career In 2004, Silbert founded Nasdaq Private Market, SecondMarket, an onl ...

. Genesis' business consists of entities that provide trading, lending, and custody digital assets, targeting institutional clients and

high-net-worth individual In the financial services industry, a high-net-worth individual (HNWI) is a person who maintains liquid assets at or above a certain threshold. Typically the criterion is that the person's financial assets (excluding their primary residence) are ...

s. They claim to have been the first OTC Bitcoin trading desk, launched in 2013. Genesis acquired the London-based crypto asset custodian company Volt in early 2020. Grayscale Investments' crypto assets were held by

Xapo Xapo Bank is a private bank headquartered in Gibraltar, which operates globally and is licensed as a virtual currency , virtual asset currency provider by the Gibraltar Financial Services Commission. As of 2023, the company offers stock market t ...

, which

Coinbase Coinbase Global, Inc. is an American cryptocurrency exchange. It was founded in 2012 by Brian Armstrong and Fred Ehrsam. Coinbase has over 100 million users, and is the largest U.S. based cryptocurrency exchange as well as the world's bigge ...

bought in 2019. After the Volt acquisition, Genesis moved its crypto custody from Coinbase to Grayscale. In early July 2022, Genesis' parent company

(DCG) took on some of Genesis' debts to keep the company afloat after it was left exposed to losses from loans made to Singapore-based crypto lender Babel Finance and the bankrupt crypto hedge fund, Three Arrows Capital (3AC). Former CEO Michael Moro stepped down from his post on August 17, 2022. Genesis COO Derar Islim assumed the role of Interim CEO. In November 2022, the company said that it had $2.8 billion in outstanding loans. The company hired investment bank

Moelis & Company Moelis & Company is a global investment bank that provides financial advisory services to corporations, governments, and financial sponsors. The firm advises on strategic decisions such as mergers and acquisitions, recapitalizations and restruc ...

to assist in restructuring. The options the company was considering at the time included declaring bankruptcy. In the same month, ''

Barron's ''Barron's'' (stylized in all caps) is an American weekly magazine and newspaper published by Dow Jones & Company, a division of News Corp, since 1921. Founded as ''Barron's National Financial Weekly'' in 1921 by Clarence W. Barron (1855–19 ...

'' reported that Genesis was under investigation by state securities regulators. On January 12, 2023, the

Securities and Exchange Commission The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...

charged Genesis Global Capital, LLC with the unregistered offer and sale of securities to retail investors through Gemini Trust Company’s Gemini Earn crypto asset lending program. The SEC is seeking permanent injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties against both Gemini and Genesis. On January 19, 2023, Genesis Global Holdco, LLC and two of its lending business subsidiaries, Genesis Global Capital, LLC and Genesis Asia Pacific Pte. Ltd., filed voluntarily petitions under

Chapter 11 Chapter 11 of the United States Bankruptcy Code ( Title 11 of the United States Code) permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, w ...

of the U.S. Bankruptcy Code in the Southern District of New York. Genesis listed over 100,000 creditors with aggregate liabilities in the range of US$1.2–11 billion dollars. The company stated that its derivatives and spot trading business were not a part of the bankruptcy filing and continue operating. On February 6, 2023, Genesis Global Holdco announced an agreement in principle with DCG and creditors of Genesis Global Capital. The agreement was filed with the court on February 10, 2023 describes that DCG will give its equity interest in Genesis Global Trading, Inc. (GGT) to Genesis Global Holdco, LLC.. DCG will also refinance its loans from Genesis and exchange its existing $1.1 billion promissory note for convertible preferred stock issued by DCG. After Genesis paused the withdrawals for Gemini customers claiming there was a liquidity mismatch, some of the customers formed what is now known as the Ad Hoc Group (AHG), who support the filing and confirmation of a "No Deal" Plan, seeking to deny approval of the Disclosure Statement and Motion. The AHG said that the Plan does not provide adequate information, that it does not identify the Released Parties and permits the Special Committee to designate any current and former officers and directors of the Debtors as Released Parties at any time and for any reason. Also the Plan does not provide information regarding any impact on Recoveries that legislation against Gemini including NYAG Action could cause.

References

{{Cryptocurrency American companies established in 2013 Companies that filed for Chapter 11 bankruptcy in 2023 Cryptocurrency companies