Genesis Begins Allocating $4 Billion in Assets to Repay Customers

Cryptocurrency lender Genesis said it has completed its restructuring and is in the process of distributing $4 billion in assets to creditors.

According to a press release published on the evening of August 2, cryptocurrency lender Genesis said it has completed its restructuring and has begun the process of repaying $4 billion in assets to customers.

Genesis Completes Restructuring and Commences Distributions to Creditors https://t.co/u6XuwPvSoz pic.twitter.com/0df7zqZQ0e— Latest News from Business Wire (@NewsFromBW) August 2, 2024

Genesis is a company that filed for bankruptcy in January 2023 after being affected by the collapse of cryptocurrency exchange FTX. The company revealed at the time that it had about 100,000 creditors with obligations of up to $10 billion. Notably, Genesis owed up to $3 billion to its 50 largest clients, including the Gemini exchange, asset manager VanEck, and market maker Cumberland.

However, Genesis creditors can only receive a portion of their assets, depending on the repayment method, with an average value of 64%. Specifically, Bitcoin investors will only be able to receive 51.28% of their balances, Ethereum is 65.87%, and Solana is 29.58%. Meanwhile, stablecoin and US dollar creditors will receive 100% of their assets.

Also on the evening of August 2, on-chain statistics unit Arkham discovered that Genesis wallets began to move assets away, with the aim of refunding customers. The amount sent includes 16,600 BTC ($1.1 billion) and 166,300 ETH ($521.1 million).

BREAKING: GENESIS MOVING $1.5B BTC + ETH FOR CREDITOR REPAYMENTS Wallets linked with Genesis Trading have moved 16.6K BTC ($1.1B) and 166.3K ETH ($521.1M) in the past hour - likely for in-kind repayments to creditors.

BTC: bc1qmetf6pu6ghr6fv92209sw5x9t5999562t8wmux

ETH:… pic.twitter.com/5Jtxqx8mxT— Arkham (@ArkhamIntel) August 2, 2024

Genesis' wallet deposited nearly $800 million worth of Bitcoin to the exchange between mid-June and mid-July, most likely to be sold to pay off debts.

As reported by Coin68, Genesis is a lending company owned by Digital Currency Group, which also owns Grayscale. During the crypto industry's liquidity crisis in 2022, Genesis suffered heavy losses from the bankruptcy of Three Arrows Capital, and was forced to conduct shady internal transactions with Digital Currency Group to maintain a stable facade.

However, in November of the same year, when the FTX exchange collapsed, Genesis' financial vulnerability became apparent and implicated users of the Gemini exchange, the platform that had lent Genesis money. Genesis declared bankruptcy in January 2023, with Gemini being the largest creditor with more than $900 million in assets from Earn users. Gemini then filed a lawsuit against Digital Currency Group and its head, Barry Silbert, exposing the wrongdoings of this group of companies. The case even attracted the attention of the New York Attorney General's Office (USA) and the US Securities and Exchange Commission (SEC). Genesis later agreed to pay fines of $8 million and $21 million to these regulators, respectively. Since the beginning of 2024, the company has converted assets in the form of GBTC shares back to Bitcoin, with a value of $2 billion.