On January 19, Genesis Global Capital, a subsidiary of Digital Currency Group (DCG), filed for Chapter 11 bankruptcy, but failed to provoke an upset in the crypto markets, as prices remain fairly stable.
Genesis Files for Bankruptcy
Two months after halting withdrawals on Gemini Earn and failing to raise funds, Genesis has become the latest crypto company to file for bankruptcy. It calls the filing a “strategic [action] to maximize value for all clients.”
According to the bankruptcy filing, Genesis has assets and liabilities in the range of $1 billion to $10 billion. The company says it owes an estimated 100,000 creditors. The top 50 creditors are owed a total of $3.5 billion.
Gemini owes its lending partner the most significant debt, pegged at $769 million. Genesis owes two unnamed creditors $462.2 million and another $230 million. Other notable creditors include Van Eck, Abra, and Decentraland.
Why Isn’t the Crypto Market Phased By the News?
However, despite the size of Genesis, crypto markets saw minimal volatility over the past 24 hours. The global crypto market cap remained at $977.9 billion as there were no sharp sell-offs in the market.
The 7-day global crypto market cap. Source: CoinMarketCap
A potential reason why the news has minimal impact on the market is that the bankruptcy was priced in the FTX collapse.
Also, because of Genesis’ insolvency, rumors began circulating as early as November 2022 after the FTX incident. Thus, the bankruptcy filing did not come as a surprise, unlike FTX, which brought down the market.
Many crypto investors would like to believe that the crypto market has bottomed out. Crypto analyst @DonCryptoDraper wrote on Twitter:
On the Flipside
- Amidst the bankruptcy filing, questions have been raised about the operation of Genesis and the $1.675 billion its parent company, DCG owes it.
Why You Should Care
While the crypto markets remain seemingly unfazed by the events, there is a possibility the Genesis bankruptcy could spark a contagion, as with FTX.
Read about the impact of Genesis’ insolvency on Gemini in:
Gemini Terminates Genesis Loans, Ends Crypto Yield Program
More on Genesis’ struggles:
Genesis Bankruptcy Rumors Intensify as the Firm Lays Off 30% of Staff