Genesis Trading, a prominent crypto lender owned by Digital Currency Group (DCG), has initiated the transfer of over 16,000 bitcoin (worth $1.1 billion) and 166,000 ether ($521 million) from its wallets, according to data from blockchain analytics firm Arkham Research. These significant movements suggest that Genesis is preparing to repay its creditors after a tumultuous period in the crypto industry.
This action comes over a year after Genesis agreed to repay $1.5 billion to clients of the Gemini crypto exchange, following the collapse of Gemini’s “Earn” program. Gemini had utilized Genesis to generate yields on customer deposits, which Genesis then lent to the now-bankrupt hedge fund Three Arrows Capital (3AC).
In May, Gemini announced that Earn users had regained all their digital assets, enabling Genesis to concentrate on repaying its other creditors. A court filing by Genesis in January 2023 revealed claims exceeding $3 billion from its top 50 creditors, which included Gemini, Cumberland, and VanEck’s New Finance Income Fund.
Friday’s transfer marks a potential resolution to a significant chapter in the cryptocurrency sector, which was heavily impacted by several high-profile failures during the 2022 market downturn. The contagion effect began with the collapse of the Terra stablecoin project and spread to highly leveraged firms like 3AC and Celsius, culminating in the bankruptcies of FTX and Genesis Global.
Genesis revealed in its January 2023 bankruptcy filing that it had over 100,000 creditors and liabilities potentially reaching $10 billion. The exact destination of the recent transfers remains unclear, and Genesis has not yet responded to requests for comment.
The repayment and restructuring process was further complicated by DCG’s $1.1 billion promissory note to Genesis, aimed at covering a substantial balance sheet deficit caused by losses from 3AC and FTX’s Alameda Research.
In October 2023, New York Attorney General Letitia James filed a civil suit against DCG, Genesis, Gemini, and several executives, alleging a conspiracy to defraud investors by concealing $1 billion in trading losses and misrepresenting Genesis’ financial health. Genesis halted withdrawals in November 2022.
