Genesis Crypto Exchange, purportedly needs $500mm to $1bn in emergency financing or will face bankruptcy. Genesis, likely already lost more money than it ever earned thanks to the 3AC bankruptcy and FTX – Alameda Implosion but DCG absorbed the $1.2bn bankruptcy claim in return for a promissory backstop in Q2.
DCG – the parent company of Genesis, currently has debt in excess of assets and limited liquidity, BUT it also has Grayscale, which produces $250-300mm per year in fees, and whose AUM is locked.
DCG, is the one who will collect presumably $1.2B from 3AC bankruptcy which will be used to pay the loan they took from Genesis to “buy” aka “absorb” the 3AC “asset” to shore up genesis balance sheet.
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Gemini,Tweeted on measures they are exploring to navigate the situation, their fears is presumably Users will remove funds regardless to the cold storage-Proof of Reserves held 1:1. They are trying to position a soft landing.
1/5 Update for Earn customers: we continue to work with Genesis Global Capital, LLC (Genesis) — the lending partner of Earn — and its parent company Digital Currency Group, Inc. (DCG) to find a solution for Earn users to redeem their funds.
— Gemini (@Gemini) November 22, 2022
Let’s hope it gets figured out or they may be the next Exchange to wind up, I hope I’m wrong but, I’m not buying Gemini’s statements, they are stalling because they actually don’t have solutions, and probably don’t have the assets they should to honor customer withdrawals. IRA Financial Trust filed a suit alleging Gemini Trust of Security Failures in June.
IRA Financial Trust (IRA), a leading platform for self-directed retirement and pension accounts, has filed a lawsuit against Gemini Trust Company (Gemini), a cryptocurrency exchange and custodian, following a February 2022 theft of $36 million of crypto assets in Gemini’s custody belonging to customers’ retirement accounts.
Gemini Trust Company was founded and is owned by Cameron and Tyler Winklevoss.
IRA Financial Trust has been working to find resolution for its impacted customers since this incident occurred and is pledging to use the proceeds from the lawsuit to reimburse IRA Financial customers impacted by the February 8, 2022, incident.
As stated in the complaint, the lawsuit, IRA Financial Trust v. Gemini Trust Company, LLC, alleges that the Gemini cryptocurrency exchange platform did not have proper safeguards in place to protect customer crypto assets. The lawsuit also claims that Gemini failed to freeze accounts within a sufficient timeframe immediately following the incident, allowing the criminals to continue moving funds out of customers’ accounts on the Gemini exchange after IRA notified Gemini.
The lawsuit further outlines Gemini’s alleged lack of transparency with its cybersecurity protocols—noting the Gemini Cryptocurrency Exchange platform’s API was designed with only a single point of failure, as stated in the complaint.
Bob Loukas stated;
If Genesis goes down hard, then some serious “Old Crypto” money will be lost. On top of FTX (newer money). Massive wounds. Then the regulatory hammer will come 2023.
I, reckon there’ll be a huge crash down probably due to Genesis going down hard, then an immediate v shape back up (say BTC from $15k -> $6k -> $20k). Then another big dump (prob catalyst will be draconian regulations).
Luka Martin tweeted, the question is not just how much money they need, but also what obligations are potential investors inheriting, interpret it as $500M just keeps the lights on for now, but who knows for sure since communication is so poor.
A year ago crypto twitter raised $47million in days to buy a *copy* of the United States constitution.
Now we have Genesis, one of the largest crypto trading/lending desks, in need of $500 million.
Feel like this one is much more important.
Can someone spin up a DAO & save us?
— Luke Martin (@VentureCoinist) November 21, 2022
Doubt people will collectively agree on bailing out Genesis. The Constitution “purchase” worked cause it was fun, and a community was built around it. It was true decentralization for a good cause, DeFi communities don’t forget. They will fund a more honest company instead.
