by Tech Talk | Jan 24, 2023 | Articles
The lending unit of crypto firm Genesis filed on Thursday for US bankruptcy protection from creditors, toppled by a market rout along with the likes of exchange FTX and lender BlockFi.
Genesis Global Capital, one of the largest crypto lenders, froze customer redemptions on 16 November after FTX stunned the financial world with its bankruptcy, fuelling concern that other companies could implode. The company is owned by venture capital firm Digital Currency Group (DCG).
Genesis’s lending unit said it had both assets and liabilities in the range of US$1-billion to $10-billion, and estimated it had over 100 000 creditors in its filing with a US bankruptcy court.
Genesis Global Holdco, the parent group of Genesis Global Capital, also filed for bankruptcy protection, along with another lending unit Genesis Asia-Pacific.
Genesis Global Holdco said in a statement that it would contemplate a potential sale or an equitisation transaction to pay creditors, and that it had $150-million in cash to support the restructuring.
It added that Genesis’s derivatives and spot trading, broker dealer and custody businesses were not part of the bankruptcy process and would continue their client trading operations.
Genesis’s bankruptcy filing is the latest in a cascade of crypto failures and steep job cuts triggered by plunging prices last year.
Genesis was already locked in a dispute with Gemini Trust Co, founded by the identical twin cryptocurrency pioneers Cameron and Tyler Winklevoss, former US Olympic rowers. The two firms are fighting over a crypto lending product called Earn that they jointly offered.
Charged
The Winklevoss twins have said Genesis owed more than $900-million to some 340 000 Earn investors. On 10 January, Cameron Winklevoss called for the removal of Barry Silbert as the chief executive of DCG.
About an hour after the bankruptcy filing, Cameron Winklevoss tweeted that Silbert and DCG continued to deny creditors a fair deal.
“Unless Barry [Silbert] and DCG come to their senses and make a fair offer to creditors, we will be filing a lawsuit against Barry and DCG imminently,” Winklevoss said in his tweet thread.
Genesis and Gemini were charged by the US Securities and Exchange Commission on 12 January with illegally selling securities to investors through the Earn programme. Tyler Winklevoss called the complaint disappointing.
Genesis brokered digital assets for financial institutions such as hedge funds and asset managers and had almost $3-billion in total active loans at the end of the third quarter, down from $11.1-billion a year earlier, according to its website.
Last year, Genesis extended $130.6-billion in crypto loans and traded $116.5-billion in assets, according to its website.
Its two biggest borrowers were Three Arrows Capital, a Singapore-based crypto hedge fund, and Alameda Research, a trading company closely affiliated with FTX, a source told Reuters. Both are in bankruptcy proceedings.
Three Arrows debt to Genesis was assumed by its parent company DCG, which then filed a claim against Three Arrows. DCG’s portfolio companies also include crypto asset manager Grayscale and news service CoinDesk.
Crypto lenders, which acted as the de facto banks, boomed during the pandemic. But unlike traditional banks, they are not required to hold capital cushions. Earlier this year, a shortfall of collateral forced some lenders — and their customers — to shoulder large losses. — Tom Hals and Akanksha Khushi, (c) 2023 Reuters
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by Tech Talk | Nov 22, 2022 | Articles
The collapse of FTX contains lessons for all of crypto, according to ethereum co-founder Vitalik Buterin.
Buterin emphasised the stability of crypto’s so-called underlying technology, the blockchain, while acknowledging the heavy impact of the meltdown of the Sam Bankman-Fried crypto empire.
In the days since FTX filed for bankruptcy, entities ranging from BlockFi to Genesis to Gemini have been hit by the fallout.
Despite the upheaval, Buterin said blockchain base layers and decentralised-finance protocols worked “flawlessly”.
“What happened at FTX was of course a huge tragedy,” Buterin said. “That said, many in the ethereum community also see the situation as a validation of things they believed in all along: centralised anything is by default suspect,” he said. These beliefs also included putting one’s trust in “open and transparent code above individual humans”, he added.
Buterin, like many others in crypto Twitter, has in recent days weighed in on how crypto exchanges could help shore up confidence in their businesses. The downfall of Bankman-Fried has led to an industry-wide self-reckoning over transparency and risk.
Commenting on the earlier collapse of Do Kwon’s terraUSD algorithmic stablecoin and associated luna token, Buterin said “crashes like that are on the one hand necessary for the ecosystem”. On the other hand, he added, “I really wish that it happened when terra/luna was like 10 times smaller”. — Bloomberg
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by Tech Talk | Nov 14, 2022 | Articles
Crypto exchange FTX is to start US bankruptcy proceedings and CEO Sam Bankman-Fried is to step down, after a liquidity crisis at the cryptocurrency group that has prompted intervention from regulators around the world.
The distressed cryptocurrency trading platform has been struggling to raise billions in funds to stave off collapse while coming under heightened regulatory scrutiny.
The company said in a statement on Friday, shared via a tweet, that FTX and its affiliated crypto trading fund Alameda Research and approximately 130 other companies have commenced voluntary chapter 11 bankruptcy proceedings in Delaware.
John J Ray III has been appointed CEO of the group. Bankman-Fried has resigned but will assist with an orderly transition.
The week-long saga that began with a run on FTX and an abandoned takeover deal by rival Binance has hit an already struggling bitcoin and other tokens.
FTX was scrambling to raise about US$9.4-billion from investors and rivals, Reuters reported citing sources, as the exchange sought to save itself after customer withdrawals.
The predicament marks a rapid reversal for Bankman-Fried, the 30-year-old crypto executive whose wealth was estimated by Forbes at around $17-billion just two months ago. — Reuters
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by Tech Talk | Nov 1, 2022 | Articles
Cryptocurrencies have suffered a massive hit in 2022, losing more than $1,9-trillion in value since the height of last year’s rally. Although Bitcoin was at the center of the crypto price crash, many other coins have suffered more severe price drops than the world’s most expensive cryptocurrency.
According to data presented by TradingPlatforms.com, Solana was the biggest crypto price loser in 2022, with an 83% price drop year-to-date. Here is the list of other cryptocurrencies that have suffered the biggest hit this year.
The 2022 crypto market crash has caused a double-digit price drop to all major coins and thrust a spotlight on thousands of cryptocurrencies and whether they will survive. The world’s two leading cryptos, Bitcoin and Ethereum, have lost 59% and 64% in total value year-to-date, ranking sixth and seventh on the biggest price losers list.
According to CoinMarketCap data, besides Solana, Polkadot and Cardano suffered the biggest price drop in 2022.
Solana’s 83% price drop has wiped $43,5-billion of its market cap year-to-date. Polkadot follows with a 78% plunge and a $20,4-billion market cap drop. Cardano’s price has been slashed by 73% in the last ten months, placing it third on this list. Also, its market cap plunged by $33bn in this period. Together, the three cryptos lost around $97-billion in market cap year-to-date.
After grabbing the investors` attention as one of the fastest-growing cryptos last year, Dogecoin has seen its price tumble in 2022. The CoinMarketCapa data showed the meme coin lost 65% of its value in ten months, ranking as the fifth largest crypto price loser this year. Last week, Dogecoin’s market cap stood at $7,7-billion, down from $22,8-billion in January.
With a 67% year-to-date price drop and $11,4-billion wiped off its market cap, Polygon stands one place above Dogecoin. Statistics show that all other major crypto coins have also seen a double-digit price drop this year. Behind Bitcoin and Ethereum, BNB and XRP follow with a 47% and 44% drop.
Together, these cryptos make up 68% of the global crypto market cap, which stood at $918,6-billion last week, down from $2,2-trillion in January.
Editor@tech-talk.co.za
