Genesis has been a weight around the neck of crypto organizations since its collapse in November. Here’s how it worked: you give Genesis money, and they give you yield by giving out loans. Nothing new there, but there’s one major difference in this situation that makes Genesis important. The money came from institutions and major funds. It was trusted to be a place to park large amounts of money for rich people and powerful groups.
Genesis was a subsidiary of Digital Currency Group (DCG), one of the largest and most well established organizations in the space. Digital Currency Group (DCG) is also the parent company of Grayscale, the pseudo-ETF which holds $11B in BTC, and CoinDesk, the news outlet that broke news of FTX’s insolvency. In a September 2022 filing, Genesis claimed it held $2.8B in crypto deposited by its customers.
Now Genesis is filing for bankruptcy, a lengthy and expensive process which often results in lackluster outcomes for affected clients. One of those clients is the major US based exchange run by the Winklevoss twins, of losing Facebook to Zuckerberg fame. Gemini has a massive Earn program where clients of the exchange could deposit their money to get yield–by sending that money to Genesis.
On January 19th, when Genesis filed for bankruptcy, Cameron Winklevoss posted about the situation in more detail. He detailed that in their negotiations, DCG and Genesis have not offered a “fair deal” to creditors. Here’s their next steps:
“We have been preparing to take direct legal action against Barry, DCG, and others who share responsibility for the fraud that has caused harm to the 340,000+ Earn users and others duped by Genesis and its accomplices.”
For as bad as the situation has been, I have to give credit where it’s due. The Winklevoss twins have been the most outspoken and aggressive company heads that I’ve seen when it comes to trying to recover their customer’s funds. Gemini seems to have weathered the storms pretty well, and they’re due some credit for that. I hope one day they go public so I can trust my money there.