Genesis to Declare Bankruptcy Soon While DoJ to Announce Major International Crypto Enforcement Action

Bloomberg reports Genesis may be getting ready to declare bankruptcy. The troubled crypto lender has been under the shadow of bankruptcy for weeks, following the credit crunch that hit the crypto industry.

Genesis was one of the largest lenders in the region, often acting as a third party to other lending organizations, promising yields far in excess of anything available in traditional financial markets.

Bloomberg reports that people familiar with the discussions between Genesis, a unit of Digital Currency Group, and creditors There are suggestions that bankruptcy may be declared as of this week.

DCG is the closest thing crypto has to a conglomerate and in other news DCG has suspended its quarterly dividend distribution until further notice.

Contagion Fears – Will DCG and Genesis Survive

Genesis creditors include depositors with an Earn Lending product promoted by the Winklevoss twins-owned Gemini Exchange.

The Winklevoss and DCG CEO Barry Silbert have been engaged in a very public dispute, which has seen the twins accuse Silbert of barring Silbert from paying back depositors who earned $900 million.

Other large creditors include Dutch-based crypto exchange BitWoW, which is owed $280 million.

Genesis’ credit woes stemmed from the collapse of crypto hedge fund Three Arrows Capital and were compounded by the collapse of FTX.

Genesis suspended withdrawals last November.

a Letter to DCG shareholders dated 17th January There will be growing concern about the contagion effect of Gensis on the rest of the group. DCG has made venture investments in over 150 other crypto firms of varying sizes.

In a letter notifying shareholders of the suspension of the dividend until further notice, Silbert said “strengthening our balance sheet by reducing operating expenses and preserving liquidity”.