Digital Currency Group's Genesis has filed for bankruptcy, becoming the latest victim of the shakeout in the digital asset market after the collapse of the crypto exchange FTX. This news has sent ripples through the crypto community, leaving many to wonder what exactly is Digital Currency Group and what does Genesis do?
Digital Currency Group, or DCG, is a venture capital firm that invests in the cryptocurrency and blockchain industry. They have a diverse portfolio of companies that range from exchanges and wallets to mining companies and blockchain infrastructure providers. Some notable companies in their portfolio include Grayscale, CoinDesk, Circle, and Chain.
Who Owns Digital Currency Group
DCG was founded in 2015 by Barry Silbert, a pioneer in the crypto space and one of the first investors in Bitcoin. Since then, they have become one of the most influential players in the crypto industry and have invested in over 150 companies in the space, including industry leaders such as Coinbase, Circle, and Kraken.
The company is known for its focus on building a strong ecosystem of companies, and it is considered one of the most active and influential investors in crypto.
Genesis, on the other hand, is a cryptocurrency lending platform that is owned by DCG. They offer loans to individuals and institutions in exchange for collateral in the form of cryptocurrency. They also provide trading, broker-dealer, and custody services.
Genesis was founded in 2013 and quickly became one of the largest crypto-lending platforms in the world.
Genesis Global Bankruptcy
As you may have heard, Genesis Global Holdco LLC and two of its subsidiaries have filed for bankruptcy protection. This news comes as a result of the collapse of the crypto exchange FTX, which has caused a domino effect in the crypto lending industry, otherwise known as crypto contagion.
Genesis extended loans to both individual and institutional investors in order to fuel crypto trades. However, as we entered into a crypto winter, many companies that relied on this business model fell apart. Genesis held on for longer than others but ultimately couldn't survive the market downturn.
So what does this mean for customers of Genesis? Filing for bankruptcy protection automatically shields the company from legal claims by creditors or business partners. This also opens up a path for pausing any litigation against its parent company Digital Currency Group Inc. and other affiliates while negotiations unfold.
According to a statement made by Genesis, the proposed restructuring plan would see customers receiving a combination of cash, other assets, and equity in the reorganized company. However, it's important to note that this process may take months or even years to work itself out before the company can figure out how many assets can be distributed to customers and other stakeholders.
This news is just the latest example of how the collapse of FTX has affected the crypto industry. Genesis had lent at least hundreds of millions of dollars to the trading firm Alameda Research, which is an affiliate of FTX which we all know by now was insolvent.
In light of this news, it's important to stay informed and do your research before making any crypto-related investments. It seems as if the crypto markets had already priced this news in, and Bitcoin is currently trading above $22k.