Collapsing crypto lender Genesis owes creditors more than $3bn, the Financial Times reveals

Genesis’s owner company is seeking to offload $500mn venture crypto-related assets to help the cryptocurrency brokerage.

Crypto broker Genesis owes creditors more than $3bn, prompting its owner Digital Currency Group (DCG) to explore selling assets in its large venture portfolio to raise money, a report from the Financial Times reveals.

According to the newspaper, Genesis’s owner company DCG – a conglomerate that is one of the largest and earliest backers of crypto coins and companies – is seeking to raise fresh cash by offloading parts of its venture capital holdings, which include 200 crypto-related projects (such as exchanges, banks and custodians in at least 35 countries) worth about $500mn after its Genesis unit was wrongfooted in November by the collapse of FTX. 

The Financial Times reports that Genesis’s debts to creditors amounts to more than $3bn, including $900mn to customers of Gemini, €280mn to Dutch exchange Bitvavo, and also money to customers of crypto savings company Donut. The crypto firm has hired investment bank Moelis to help explore its options but talks for outside funding have so far failed to materialise.

Founded in 2015 by former Houlihan Lokey banker Barry Silbert, DCG controls crypto media outlet CoinDesk and investment manager Grayscale and has run one of crypto’s biggest venture portfolios, backing a range of crypto exchanges, including Coinbase, Kraken, Blockchain.com and also FTX, in which it invested $250,000 in July 2021. It was valued at $10bn in 2021 and backed by blue-chip investors including SoftBank, Ribbit Capital and Alphabet’s venture arm CapitalG.

Genesis halted customer withdrawals in November after the implosion of FTX, blaming “unprecedented market turmoil”. DCG chief executive Silbert told shareholders on Tuesday that the group had cut 30 per cent of the workforce at Genesis and recently shut its wealth management business in an effort to reduce costs. Retail customers have been caught in the middle of the situation, with some customers of Gemini whose funds are trapped at Genesis having invested hundreds of thousands of dollars each.