Image of live cryptocurrency market values on display in Brisbane, Australia, on February 8, 2018. Cryptocurrency lender Genesis filed for bankruptcy late Thursday. File Photo by Dave Hunt/EPA-EFE
Jan. 20 (UPI) — In a continued breakdown of the cryptocurrency industry, virtual lender Genesis filed for Chapter 11 bankruptcy late Thursday, listing liabilities of up to $11 billion.
The filing marks the latest shoe to fall since the bankruptcy filing of FTX, one of the industry’s top exchanges, and its co-founder Sam Bankman-Fried being arrested on fraud charges.
In its bankruptcy filing, Genesis listed more than 100,000 creditors with aggregate liabilities ranging from a low of $1.2 billion to a high of $11 billion. The company said it will continue trading derivatives and conducting spot trading under Genesis Global Trading.
“We look forward to advancing our dialogue with [owner Digital Currency Group] 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 interim CEO Derar Islim said, according to CNBC.
Genesis aspired to be the prime broker for digital currencies when it started in 2013 and created its lending business in 2018. At the top of the crypto boom in 2021, its loan originations jumped to $121 billion for that year.
When the crypto market balloon started to deflate last summer, with the market dropping by 50%, Genesis borrower defaulted on a $1.2 billion loan, making the lender’s arrival at bankruptcy almost inevitable.
The Securities and Exchange Commission last week charged Genesis and another crypto firm Gemini with allegedly selling unregistered securities. The SEC is seeking permanent injunctive relief, disgorgement, and civil penalties against both.
A week ago, Crypto.com, one of the most prominent cryptocurrency exchanges, announced it was laying off 20% of its workforce.
Crypto.com, which had grown into the third-largest cryptocurrency exchange by the size of employees, said at the time that unforeseen collapse of fellow crypto exchange FTX led to the decision to reduce its workforce.