Genesis Global Trading, a cryptocurrency lending firm that’s being pursued by creditors and is being sued by the Winklevoss brothers’ exchange Gemini, owes nearly $1 billion on its loan. The collateral for the loan was worth less than half of what it was valued at just three months ago in court documents. “It is true that Genesis provided financing transactions using cryptocurrency,” Barry Silbert said in an email after publication of this story.
A cryptocurrency lending firm owes the Winklevoss exchange nearly $1 billion.
Forbes reported that a cryptocurrency lending firm is owed nearly $1 billion by the Winklevoss exchange Gemini. The reason for this is because their firm had lent out its coins to investors who were then supposed to pay back the money with interest. However, since many people are unable or unwilling to pay back their loans in full when they fall behind on payments (and there’s no way of knowing who these people are), these crypto loans have become extremely risky propositions for anyone who wants them—and now, Gemini finds itself owing more than $1 billion in bad debt from all of those loans gone bad.
Digital Currency Group, headed by Bitcoin billionaire Barry Silbert, is one of those creditors and it has filed a lawsuit in New York State Supreme Court seeking to seize and liquidate the collateral Genesis used to secure its loan.
DCG is the parent company of both the Gemini Exchange and the Winklevoss Bitcoin Trust, which are both traded on NYSE Arca. DCG is one of several creditors that have filed court documents in an effort to seize and liquidate Genesis’ collateral if it hasn’t paid off its loans by April 30th. The other creditors include:
- Sequoia Capital (which invested $15 million in Genesis)
- Barry Silbert (who invested $35 million)
- Jeff Garzik (who helped launch Bloomberg’s Crypto Market Data Feed).
The collateral was valued at $1.05 billion on March 31, according to court documents, but has fallen in value since then after being sold by FTX.
The collateral was valued at $1.05 billion on March 31, according to court documents, but has fallen in value since then after being stolen by FTX.
The judge gave a deadline of June 24 for Genesis and Gemini to file a joint motion asking the court to allow them to settle the dispute with each other rather than going through arbitration. Gemini declined to comment beyond what it said in its motion for appointing a receiver in the case. Its motion for appointing a receiver in the case is available online.
Genesis has not responded to requests for comment through its website or Twitter account.
Genesis is a cryptocurrency lending firm and is owned by Genesis Global Trading. The company has been involved in controversies related to its business practices, including allegations that it engaged in market manipulation and other illegal activity. In March 2019, the Financial Times reported that Digital Currency Group (DCG), which owns over 100 digital asset companies including Coinbase and Gemini Trust Company, is pursuing a lawsuit against Genesis Global Trading for $96 million which it says it still owes them as part of their arrangement to purchase shares of the company back in October 2018.
“We hope that once Genesis’ financial situation becomes known, the existence of other crypto lenders will not be jeopardized,” Barry Silbert said in his email.
“We hope that once Genesis’ financial situation becomes known, the existence of other crypto lenders will not be jeopardized,” Barry Silbert said in his email. Crypto lending is a risky business. Lenders need to be careful about who they lend money to and how much they lend.