Genesis Global has officially announced the cessation of its trading operations. This comes after the crypto lender, an affiliate of Digital Currency Group (DCG), recently lodged a hefty lawsuit against its parent entity in a New York bankruptcy court.
Once a titan in cryptocurrency trading, Genesis Global’s demise reflects the increasingly volatile and uncertain landscape of the cryptocurrency industry. A Genesis spokesman reportedly said in an e-mailed statement on Thursday:
“This decision was made voluntarily and for business reasons.”
Voluntary Shutdown Amidst Business Struggles
Genesis Global has taken the unprecedented step of voluntarily winding down its derivatives and spot trading operations, as the spokesperson for the company stated.
The move is said to be effective immediately for derivatives trading, while the plug will be pulled on spot trading on Sept. 21, according to internal memos.
This news arrives following a decision earlier this month to wind down spot trading services offered by Genesis Global Trading, an associated entity.
Genesis to close U.S. spot trading business
September 5, 2023https://t.co/DxdZbpndwy pic.twitter.com/GMcSs3QpRL
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The company’s financial woes came into the spotlight when it filed for bankruptcy in January 2023. A massive liquidity crisis triggered this in November 2022, which led to the suspension of withdrawals.
At that point, Genesis had a colossal debt of over $3.5 billion, with crypto exchange Gemini among its top creditors.
Lawsuit Against Parent Entity DCG
To navigate its financial quagmire, Genesis Global has launched a $620 million lawsuit against DCG and DCG International Investments Ltd. The lawsuit’s primary objective is the recovery of unpaid loans and related expenses. The amount includes an outstanding loan of $500 million from DCG and 4,550 bitcoins from DCG International Investments, equivalent to approximately $117.1 million at the current rate.
Genesis had previously introduced a debt repayment plan, which didn’t find favor among most of its key creditors despite some initial support. This inability to reach a mutual agreement led Genesis to take the drastic action of suing its parent entity, DCG. The litigation centers around claims that loans extended by Genesis to DCG and DCG International have remained unpaid since they matured in May.
A Ray of Hope for Creditors?
DCG, seemingly acknowledging its subsidiary’s mounting pressures, filed a new agreement plan on Sept. 13, potentially providing a lifeline to unsecured creditors. The proposal suggests a 70–90% recovery, a substantial portion of which will be in digital currencies.
If Gemini chips in $100 million, users could potentially recover more than their full claims, according to the proposal. This could serve as a significant redemption point for the beleaguered Genesis Global and its creditors.
The fall of Genesis Global serves as a cautionary tale in the volatile realm of cryptocurrency. As crypto winter tightens its grip on the industry, businesses that once flourished are finding it increasingly hard to navigate the complexities and uncertainties that come with it.
Whether this development is a harbinger of more turbulence in the crypto world or just a lone iceberg in an otherwise navigable sea, it will be closely followed in the coming months.
With Genesis’ exit from the trading sector, the market lost a player that had handled a whopping $116.5 billion in spot trading since its inception in 2013. Its third-quarter report from last year showed that the firm had traded $18.7 billion in derivatives alone.
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