Genesis Ceases Cryptocurrency Trading Business
Genesis, the digital assets lender that went bankrupt in January, is facing further challenges due to the bear crypto market. The company has decided to wind down its cryptocurrency spot and derivative trading business completely. While Genesis has not provided explicit reasons for this decision, a company spokesperson confirmed that derivatives trading will cease immediately, while spot trading services will come to a halt on September 21.
In a memo released on September 14, Genesis stated that it will no longer offer digital asset spot and derivatives trading through its subsidiary, GGC International, Ltd. (GGCI). Genesis Bermuda Holdco Ltd. fully owns GGCI, which is based in the British Virgin Islands.
“This decision was made voluntarily and for business reasons. With this termination of services from GGCI, Genesis no longer offers trading services through any of its business entities.”
Earlier this month, US-based Genesis Global Trading, which is affiliated with the Digital Currency Group and was not affected by the parent company’s bankruptcy in January, announced the closure of its cryptocurrency spot trading service on September 18. The company stated that it is currently in discussions with regulatory bodies such as the New York Department of Financial Services and the US Securities and Exchange Commission (SEC).
Effects of Bankruptcy
Genesis was once considered the largest derivative service provider until it became embroiled in a controversy with the Winklevoss brothers’ crypto exchange Gemini. Gemini had loaned $900 million of customer funds to Genesis, which subsequently became stuck. This prevented Gemini Earn customers from withdrawing their assets, affecting over 340K customers. Cameron Winklevoss accused Genesis CEO Barry Silbert of using delay tactics to prolong the company’s official bankruptcy.
In addition to these challenges, Genesis and Gemini were charged by the US SEC on January 12, 2023, for offering unregistered securities through Gemini’s Earn product. A week later, Genesis filed for Chapter 11 bankruptcy. Although the spot and derivatives trading as well as custody businesses were not part of the bankruptcy filing and continued to operate, the crypto market turmoil has now resulted in the closure of these trading services as well.
Hot Take: Genesis Forced to Close Cryptocurrency Trading Services Due to Bankruptcy Fallout
The bankruptcy of Genesis earlier this year continues to have a profound impact on its operations. The company’s decision to wind down its cryptocurrency spot and derivative trading business is a direct consequence of the bear crypto market and the controversies it faced with Gemini. This closure follows the shutdown of Genesis Global Trading’s spot trading service. The fallout from the bankruptcy has affected thousands of customers who were unable to withdraw their assets. The charges brought by the US SEC further exacerbated the situation. As a result, Genesis has been forced to cease its trading services, marking a significant setback for the once-prominent digital assets lender.
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