Cryptocurrency lender Genesis Global Holdco filed for bankruptcy Thursday night, the latest cryptocurrency firm to do so after the collapse of FTX, the exchange founded by Sam Bankman-Fried.
A year ago, Genesis and a host of other big lending firms lured millions of customers with the promise that they could deposit their cryptocurrency and earn sky-high returns. But Genesis’ bankruptcy filing makes it the fourth major crypto lender to fail since last spring, when a downturn in the digital asset market sent prices tumbling. Other major lenders that have failed include the Celsius Network and Voyager Digital, whose clients lost billions of dollars in deposits.
Genesis survived the longest, but suffered the consequences of FTX’s implosion. In November, Genesis said it was freezing withdrawals, citing “market turbulence” caused by the bankruptcy of Mr. Bankman-Fried’s business.
The filing with the bankruptcy court for the Southern District of New York involved three entities: Genesis Global Holdco and two of its subsidiaries, Genesis Global Capital and Genesis Asia Pacific.
Genesis is a subsidiary of Digital Currency Group, the cryptocurrency conglomerate founded by Barry Silbert in 2015. Mr. Silbert’s management and troubles at Genesis have recently brought him into conflict with two other prominent cryptocurrency executives, Cameron and Tyler Winklevoss, who run the Gemini exchange.
Last week, the Securities and Exchange Commission charged Genesis with offering unregistered securities in partnership with Gemini. Gary Gensler, chairman of the SEC, said at the time that Genesis and Gemini had bypassed “disclosure requirements designed to protect investors.”
The Winklevoss have publicly accused Genesis’ parent company, DCG, of stagnation to keep the funds that belong to their clients. They have also claimed that DCG and Genesis misrepresented financial information and mischaracterized the value of the company’s assets to give the impression that Genesis was better off than it was.
The SEC charges against Genesis and Gemini were part of a broader crackdown on cryptocurrency lenders. In February, the agency announced $100 million in fines against BlockFi, a cryptocurrency lender. BlockFi filed for bankruptcy in November, becoming one of the first major victims of the FTX collapse.
Earlier on Thursday, the SEC announced a $45 million settlement with another crypto lending company, Nexo, for violating securities law.
