Early in 2022, falling prices started to snowball into a landslide when Terra's stablecoin network collapsed, affecting the massive hedge fund Three Arrows Capital, which then foreclosed on its creditors in the linked crypto realm, sparking a credit crisis. Genesis, which already joins companies like Voyager Digital and Celsius in declaring bankruptcy, found that the failure of FTX and Alameda Research was simply too much to bear.
Genesis' cryptocurrency loan operation sought bankruptcy proceedings protection, but its trading division, which remained outside of Chapter 11, continued to move money about on blockchains, indicating that the operation still was operating at least partly normally.
Blockchain information gathered by Etherscan shows that on Thursday, the day of the bankruptcy case, a wallet managed by the Genesis OTC trading desk delivered around $125 million in ETH, FTM, and USDT to Coinbase, Binance, Bitstamp, and Kraken. The wallet has made a number of more transactions in the last few hours, receiving nearly $50 million USDC.
It's still early to tell how the bankruptcy of Genesis's lending organizations will end up affecting the spot and derivatives businesses, but the moves are consistent with holding company Digital Currency Group's (DCG) assurance that the Genesis trading business will “continue to operate business as usual” (DCG is also the parent company of CoinDesk).
“The reputation of Genesis is in the bin,” Charles Storry, head of growth at cryptocurrency index platform Phuture, stated in an interview with CoinDesk that, “Maybe they keep some legacy clients. Maybe. As for introducing new clients, no chance while bankruptcy is in play.”
A Twitter poll was posted by The Block journalist Frank Chaparro asking customers if they planned to continue to trade with Genesis following the bankruptcy of the lending business. As of the time of publication, 938 out of them had voted “no,” or 73.7%.
The OTC desk wallet transmitted 50,000 ETH to Coinbase, 20,000 ETH to Bitstamp, and 5,000 ETH to Kraken on Thursday during the crypto activity. As per Etherscan, it also transmitted 7.7 million FTM worth $2.4 million to Binance and $3.9 million USDT to Kraken. According to Nansen.ai data, this specific wallet regularly transfers money on weekdays, so the transfers on Thursday appeared to be fairly routine despite the insolvency drama.
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