Crypto lender Genesis files for bankruptcy as FTX contagion spreads through the industry

For months, crypto lender Genesis has been seeking to raise $1 billion in an emergency loan to avoid bankruptcy. Now, the high-profile crypto lending company has fallen on a bankruptcy sword. Genesis filed for Chapter 11 bankruptcy protection late Thursday night in Manhattan federal court as FTX contagion spreads across the crypto industry.

It was a crippling blow to a business once at the heart of Barry Silbert’s Digital Currency Group ((DCG), according to bankruptcy documents, Genesis disclosed that it has aggregate liabilities ranging from $1.2 billion to $11 billion dollar. Three separate petitions were filed for Genesis’ holding companies.

Genesis is the latest in a series of crypto companies that have filed for bankruptcy in recent months as the collapse of FTX rippled across the crypto industry like an earthquake, causing the downfall of other crypto-related startups including BlockFi, Genesis Trading, Galaxy Digital, and Voyager Digital.

In a statement, Genesis interim CEO Derar Islim said: “We look forward to advancing our dialogue with DCG and our creditors’ advisors as we seek to implement a path to maximize value and provide the best opportunity for our business to emerge well-positioned for the future.”

Genesis also listed over 100,000 creditors in a “mega” bankruptcy filing. The company also listed a $765.9 million loan payable from Gemini in Thursday’s bankruptcy filing.

Just yesterday, CoinDesk, a crypto publication outlet owned by DCG was reportedly exploring selling itself as the crisis deepens at parent company DCG due to FTX contagion.

The Wall Street Journal (WSJ) reported that CoinDesk has tapped bankers for a potential sale. According to the report, CoinDesk is exploring all options including a partial or full sale of itself as the crypto crisis deepens at parent company DCG, WSJ said. CoinDesk hired advisors at Lazard to explore a potential sale. The move would also remove the publication remove it from Barry Silbert’s Digital Currency Group.

Genesis is also the latest casualty of a $2 trillion digital-asset market wipeout following its exposure to the now-bankrupt crypto hedge fund Three Arrows Capital. In November, former Genesis CEO Michael Moro stepped down and the company laid off 20% of its 260-person workforce or 52 jobs.

Derar Islim, who joined Genesis in 2020 and had overseen the development of strategy and key core functions, became the interim CEO in  November 2o22. In August, Genesis laid off 20% of its 260-person workforce or 52 jobs. The company also announced its CEO Michael Moro was stepping down.

Genesis is a wholly-owned subsidiary of Digital Currency Group, the crypto investor and conglomerate founded by Barry Silbert. Since its launch a few years ago, Genesis has emerged as a leading digital asset trading and lending firm with hundreds of institutional clients around the world.