On January 19th local time, cryptocurrency lending institution Genesis Global Capital officially applied for bankruptcy protection to the Federal District Court of New York in the United States. As one of the world's largest cryptocurrency lending institutions, Genesis issued a total of $130.6 billion (approximately RMB 880 billion) in cryptocurrency loans in 2022.

Genesis stated in its filing with the court that its assets and liabilities range from $1 billion to $10 billion (approximately RMB 6.8 billion to 68 billion).

According to media reports, Genesis currently has over $3 billion in debt holders. After applying for bankruptcy protection, creditor claims will be processed through Chapter 11 procedures. Genesis and its advisors stated that they will continue to evaluate various options to advance the process of reaching a global solution.

The bankruptcy application documents of Genesis have released a list of the 50 largest unsecured creditors. According to statistics, Genesis owes over 3.5 billion US dollars (approximately 23.7 billion yuan) to these 50 largest creditors.

Signifies the end of the era of crypto lending institutions

It is worth mentioning that Genesis Global Capital is one of the world's largest cryptocurrency lending institutions, representing digital assets for financial institutions such as hedge funds and asset management companies. Genesis' bankruptcy filing marks the end of the era of cryptolending institutions, which attempted to bring the centuries old banking business model into the digital currency field, but ultimately failed to achieve their goals.

After Genesis filed for bankruptcy, the fate of its owner, Digital Currency Group (DCG), is also affecting people's hearts. Genesis has previously warned that if cash cannot be raised, it may be necessary to apply for bankruptcy protection. Genesis' parent company, Digital Currency Group (DCG), has written to shareholders stating that the company is suspending quarterly dividends to save cash.

DCG is the world's largest crypto venture capital and also the parent company of Grayscale and CoinDesk. According to official sources, the Digital Currency Group was established in 2015 and has received support from investors such as SoftBank, Singapore Government Investment Corporation (GIC), and Alphabet's venture capital unit, CapitalG.

FTX "Thunderbolt" Becomes the Last Straw

The reason why Genesis suddenly filed for bankruptcy is due to a series of currency crisis events since 2022. Among them, the FTX "Thunderbolt", one of the world's largest virtual currency exchanges, was the last straw that crushed Genesis.

On November 11, last year, FTX filed for bankruptcy, causing the funds of over a million customers worldwide to be misappropriated and unable to withdraw account deposits. Its founder, Sam Bankman Fried, a post-90s man known as "Buffett 2.0," became a target of criticism.

The United States Securities and Exchange Commission (SEC) recently accused Bankman Fried of misappropriating billions of dollars in customer deposits to fund his commercial and political activities. And the US federal prosecutor claims that he masterminded one of the largest financial fraud cases in US history.

At that time, Genesis urgently stopped customer withdrawals citing "unprecedented market turbulence" and liquidity issues. Since then, the company has been trying to find new funds but failed, and ultimately applied for bankruptcy protection to the court on January 19th.