Beleaguered crypto lender Genesis Global Capital, the cryptocurrency lending unit of Digital Currency Group (DCG), could file for bankruptcy as soon as this week, according to Bloomberg.
What Happened: Genesis fell into a liquidity crunch, and halted redemptions shortly after revealing on Nov. 10 that it had $175 million locked in an FTX FTT/USD trading account.
The company warned investors then that it may need to file for bankruptcy if its efforts to raise $1 billion in fresh capital fail.
Financial pressure at Barry Silbert's DCG started to surface after the failures in the loosely regulated sector spread to other businesses, notably FTX, Bloomberg reports. The cascading bankruptcies demonstrate the industry's connectedness.
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Genesis suffered steep losses due to loans it provided to the now-defunct crypto hedge funds Alameda Research and Three Arrows Capital. Both Alameda and Three Arrows filed for bankruptcy last year.
Genesis laid off 20% of its workforce in August 2022, citing market conditions, and 30% more were let go earlier this month after CEO Derar Islim said that the company was "reducing costs and driving efficiencies" across all of its companies.
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