Just-In: Genesis Fires 30% Of Its Staff; Is It Next To File For Bankruptcy?

According to the latest reports, Genesis Trading, the lending arm of the greater Digital Currency Group (DCG) has started a new wave of layoffs, which will result in a reduction of its workforce by 30%. This has led to a strong indication of the financial instability that the crypto giant currently faces and also raises doubts about its sustainability in the crypto market.

Genesis 2nd Round Of Layoffs

The company sustained significant losses as a result of the provision of loans to the trading firms like Alameda Research, and to prominent cryptocurrency hedge fund Three Arrows Capital (3AC) back in 2022. Due to the financial crisis faced by these firms, bankruptcy petitions were submitted to courts while cryptocurrencies took a sharp nosedive; erasing all the gains they made earlier.

As reported earlier on CoinGape, Genesis had laid off another 20% of their 260-person workforce during the summer of 2022. However, the failure of FTX only made matters worse for the company. According to information obtained, Genesis had extended credit in the amount of at least hundreds of millions of dollars to FTX’s sibling trading firm Alameda Research, before the latter’s collapse in November. It also made sizeable contributions to the 3AC hedge fund, which was reported to be around $2.4 billion.

A spokeswoman of Genesis was quoted as saying:

As we continue to navigate unprecedented industry challenges, Genesis has made the difficult decision to reduce our head count globally. These measures are part of our ongoing efforts to move our business forward

Genesis On The Verge Of Bankruptcy?

On November 16th, Genesis temporarily ceased new loan funding and principal repayments. Due to Genesis’s action, Gemini, a cryptocurrency exchange that collaborated with Genesis on a yield scheme, has also suspended withdrawals worth $900 million from their Earn program. For survival, Genesis has even turned to investors for a $1 billion emergency loan. Attempts were made to secure funding from private equity powerhouses like Apollo Global Management and leading crypto exchange Binance.

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This week, the company’s interim CEO, Derar Islim, informed its clients that the firm was working towards finding a solution for its borrowing and lending arm, even though, it would require additional time to do so. This came after Gemini’s co-founder Cameron Winklevoss penned an open letter highlighting the delay in resuming withdrawals, which they owe to their customers.

Increasing interest rates and concerns about an economic slowdown have caused investors to flee riskier assets, which has roiled the cryptocurrency market. Furthermore, the recent bankruptcies and the recent layoffs, have led many to doubt Genesis’ feasibility and survival in the broader crypto industry.

Also Read: Check Out The Top 10 DeFi Lending Platforms Of 2023

Pratik has been a crypto evangelist since 2016 & been through almost all that crypto has to offer. Be it the ICO boom, bear markets of 2018, Bitcoin halving to till now – he has seen it all.