Genesis' troubles have been in the spotlight since the FTX and Three Arrows Capital collapse. In January this year, Genesis Global Holdco, LLC and two of its subsidiaries, Genesis Global Capital, LLC and Genesis Asia Pacific Pte. Ltd., voluntary filed for bankruptcy. Back then Genesis said that its other subsidiaries involved in the trading and custody business wouldn’t be impacted, although Genesis Trading had to lay off 30% of its workforce in attempt to avoid a bankruptcy filing.
It now seems that this move didn’t save the day: at the beginning of September Genesis Global Trading announced that it would close its U.S. focused over-the-counter trading platform on Sept. 18 – “voluntarily and for business reasons.” At the time, the firm said that spot and derivatives trading services through GGCI would remain operational. However, just two weeks later Genesis has announced that it will cease digital asset derivatives trading through GGCI as well:
“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.”
GGCI will stop offering derivatives trading immediately, while spot trading will cease on Sept. 21, according to an email sent to clients.
The multiple subsidiaries and intricate ties between them create a lot of confusion but cannot hide the fact that the whole of Digital Currency Group (DCG) is facing serious troubles. Currently it has four more subsidiaries aside from Genesis and their current state also raises concerns:
- Grayscale Investments and its main product, the Grayscale Bitcoin Trust, has also sent “unhealthy” signals for a long time: last December it was selling Bitcoin half price and recently Barry Silbert, the founder of DCG was accused of market manipulation with the trust.
- CoinDesk is allegedly planning layoffs in its editorial department in preparation for a sale of DCG's stake in the publication.
- Foundry started charging users a fee for its Bitcoin mining services this spring, although this had been free since the company launched in 2019.
- Luno, a cryptocurrency exchange based in London, left Singapore this spring and now is pausing the ability for customers to invest due to new crypto rules in the U.K.
Besides this, DCG itself is under investigation in New York for financial transactions involving Genesis, according to Bloomberg.
Taking into account that DCG is one of the largest crypto companies and has shares in about 200 other crypto companies, its collapse, should it happen, will lead to far-reaching consequences in the industry [and beyond]. We are observing the situation and wondering what might happen next.
