Genesis Global Capital

» see genesistrading.com as it lived, on the wayback machine

~ the eulogy ~

Genesis was the part of the crypto industry that retail never saw. No app, no Super Bowl ad. What it had was a lending desk that institutions borrowed from and the balance sheet of Digital Currency Group standing behind it, which by 2022 made it the largest lender of its kind anywhere. At the close of that year's third quarter it carried $2.8 billion in loans outstanding.

Ordinary money reached it anyway, through Gemini. The Winklevoss exchange sold a product called Earn that paid yield on customer deposits, and the yield came from Genesis lending those deposits out. When Three Arrows Capital defaulted in mid 2022, Genesis took the hit. When FTX collapsed that November, $175 million of Genesis funds sat locked in an FTX trading account and the rest of the industry stopped extending credit to anyone at all.

On 16 November 2022 Genesis Global Capital suspended redemptions and new loan originations. Around 340,000 Gemini Earn customers learned that day that their money was somewhere they could not reach. The SEC charged Genesis and Gemini with selling unregistered securities on 12 January 2023, and Genesis Global Holdco filed for Chapter 11 in the Southern District of New York a week after that.

This is a grave for a counterparty. Genesis never had customers the way a website has customers, and the only way an ordinary person touched it was by not knowing they had.

~ the dossier ~

~ the chain ~

2022 was a year of things falling over in sequence. Terra and Luna went first in May, which killed Three Arrows Capital in June, which killed Voyager Digital in July and pushed Celsius into bankruptcy the same month. FTX went in November because Alameda had been holding a token FTX printed. Genesis sat downstream of all of it, and a lender's assets are other people's promises.

The unusual detail is who sat upstream. Digital Currency Group owned Genesis, and it also owned Grayscale and CoinDesk, and DCG had itself borrowed heavily from its own lending subsidiary. When Genesis went under, its parent turned out to be one of the largest debtors in the case. Cameron Winklevoss spent January 2023 publishing open letters to Barry Silbert about exactly that.

~ the day it died ~

There is no single day, which is the shape most bankruptcies take. Customers lost access on 16 November 2022. The company filed on 19 January 2023. New York's Attorney General sued Genesis, Gemini and DCG that October. Judge Sean Lane confirmed the wind-down plan on 31 May 2024, and on 2 August 2024 Genesis came out of Chapter 11 as an entity whose only remaining job was paying people back.

It paid. Distributions of roughly $4 billion went out to creditors from August 2024, and Earn customers were made whole in kind, meaning they got their coins back rather than the dollar value from the day of the freeze. Measured against what happened to anyone who had money in Celsius or FTX, that is close to the best ending on offer.

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