Genesis
IndustryFinancial services
Founded2013 (2013)
FounderBarry Silbert
Area served
Worldwide
Key people
Derar Islim (interim CEO)
ParentDigital Currency Group
Websitegenesistrading.com

Genesis is a cryptocurrency brokerage for institutional investors. It is a subsidiary of Digital Currency Group (DCG).[1]

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”).[2] 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 on January 19, 2023, to request court protection to reorganize its digital assets lending and borrowing business.[3]

History

Genesis Global Trading, Inc. was founded in 2013.[4] It is a subsidiary of the Digital Currency Group, a venture capital company founded by Barry Silbert.[3]

Genesis' business consists of entities that provide trading, lending, and custody digital assets, targeting institutional clients and high-net-worth individuals. They claim to have been the first OTC Bitcoin trading desk, launched in 2013.[4]

Genesis acquired the London-based crypto asset custodian company Volt in early 2020. Grayscale Investments' crypto assets were held by Xapo, which Coinbase bought in 2019. After the Volt acquisition, Genesis moved its crypto custody from Coinbase to Grayscale.[5]

In early July 2022, Genesis' parent company Digital Currency Group (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).[1][6]

Former CEO Michael Moro stepped down from his post on August 17, 2022. Genesis COO Derar Islim assumed the role of Interim CEO.[6]

In November 2022, the company said that it had $2.8 billion in outstanding loans.[7] The company hired investment bank Moelis & Company to assist in restructuring. The options the company was considering at the time included declaring bankruptcy.[8] In the same month, Barron's reported that Genesis was under investigation by state securities regulators.[9]

On January 12, 2023, the Securities and Exchange Commission 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.[10][11]

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.,[12] filed voluntarily petitions under Chapter 11 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.[3]

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.[13][14]

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.[15]

References

  1. 1 2 Yang, Yueqi (6 July 2022). "Crypto Lender Genesis Confirms Exposure to Bankrupt Three Arrows Capital". Bloomberg. Archived from the original on 2022-07-07. Retrieved 24 July 2022.
  2. ↑ "Regulatory Information".
  3. 1 2 3 "Crypto leader Genesis Trading files for bankruptcy". CNBC. 2023-01-19. Archived from the original on 2023-01-20. Retrieved 2023-01-20.
  4. 1 2 ""About Our Company - Genesis Global Trading, Inc"". genesistrading.com. Archived from the original on 24 July 2022. Retrieved 24 July 2022.
  5. ↑ Roberts, Jeff John. "Genesis expands crypto footprint with custody acquisition". Fortune. Archived from the original on 24 July 2022. Retrieved 24 July 2022.
  6. 1 2 Vicky Ge Huang (17 August 2022). "Crypto Lender Genesis Lays Off 20% of Workforce, CEO to Depart". The Wall Street Journal. ISSN 0099-9660. Wikidata Q115175426. Retrieved 2022-11-22.
  7. ↑ "Genesis Balance Sheet Reveals Web of Loans Across Silbert Empire". Bloomberg.com. 2022-11-22. Archived from the original on 2022-11-22. Retrieved 2023-01-20.
  8. ↑ Hirsch, Lauren; Gandel, Stephen (November 22, 2022). "Genesis, the Troubled Crypto Lender, Hires a Restructuring Adviser". The New York Times. Archived from the original on November 29, 2022. Retrieved November 29, 2022 – via NYTimes.com.
  9. ↑ Light, Joe (25 November 2022). "Crypto Lender Genesis Is Subject of Probe". www.barrons.com. Archived from the original on 29 November 2022. Retrieved 29 November 2022.
  10. ↑ "SEC.gov | SEC Charges Genesis and Gemini for the Unregistered Offer and Sale of Crypto Asset Securities through the Gemini Earn Lending Program". www.sec.gov. Archived from the original on 13 January 2023. Retrieved 13 January 2023.
  11. ↑ Livni, Ephrat (2023-01-12). "S.E.C. Charges Crypto Companies With Offering Unregistered Securities". The New York Times. ISSN 0362-4331. Archived from the original on 2023-01-19. Retrieved 2023-01-20.
  12. ↑ "In re Genesis Global Holdco, LLC, et al., No. 23-10063: First Day Presentation" (PDF). Kroll Inc. January 23, 2023. Retrieved January 28, 2023.
  13. ↑ "Genesis Reaches Agreement in Principle with DCG and Key Creditors on a Global Resolution that Optimizes Outcome for Clients and Stakeholders". www.businesswire.com. 6 February 2023. Retrieved 8 February 2023.
  14. ↑ Sigalos, MacKenzie; Goswami, Rohan (6 February 2023). "Winklevoss twins' crypto exchange Gemini to contribute $100 million to Genesis bankruptcy recovery". CNBC. Retrieved 8 February 2023.
  15. ↑ Genesis Global Holdco, LLC, et al. (United States Bankruptcy Court, Southern District of New York October 31, 2023) ("Objection of the Ad Hoc Group of Genesis Lenders to (A) Debtors’ Motion to Approve (I) The Adequacy of Information in the Disclosure Statement, (II) Solicitation and Voting Procedures, (III) Forms of Ballots, Notices, and Notice Procedures in Connection Therewith, and (IV) Certain Dates with Respect Thereto, and (B) Amended Disclosure Statement with Respect to the Amended Joint Plan of Genesis Global Holdco, LLC et al., Under Chapter 11 of the Bankruptcy Code"), Text.
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