Crypto Brokerage Genesis Files for Bankruptcy After Running up $3 Billion Debt It Can't Service

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Cryptocurrency brokerage Genesis filed for bankruptcy, dealing a blow to the fintech sector close on the heels of the sensational collapse of Sam Bankman-Fried's FTX.

Genesis Global Capital owed creditors a sum believed to be more than $3 billion. It filed for bankruptcy seeking protection from creditors after earlier freezing customer redemptions in November.

Genesis crypto brokerage
Genesis crypto brokerage Coindesk

Genesis had more than 100,000 creditors when it filed for bankruptcy in New York, according to filing. The assets and liabilities of the firm, which is owned by venture capital firm Digital Currency Group (DCG) is estimated between $1 billion and $10 billion, the firm's statement said.

Losses From FTX Collapse

Genesis suffered huge losses following the collapse of FTX as it has loaned out huge sums to Sam Bankman-Fried's Alameda Research. The FTX-tied trading firm also went belly up and filed for bankruptcy in the aftermath of the biggest crypto collapse.

More Trouble for Winklevoss Brothers

Genesis' collapse is a huge blow to the Winklevoss brothers -- Cameron and Tyler Winklevoss. The twins' crypto firm Gemini had lost more than $900 million in customer funds after Bankman-Fried filed for Chapter 11 bankruptcy.

The folding up of Genesis is a fresh blow to the Winklevoss brothers as their exchange had used Genesis as its main lending partner.

Barry Silbert, Genesis
Barry Silbert, Genesis Reuters

Barry Silbert's Warning

Genesis was founded by Barry Silbert. The crypto magnate had earlier warned that the company may need to file for bankruptcy if it it could not raise more cash to meet the creditors's demands.

The subsidiaries of Genesis include CoinDesk, Foundry, Grayscale Investments and Luno.

The Winklevoss brothers said they would sue Silber and DCG unless they make a fair offer to the creditors. "Unless Barry (Silbert) and DCG come to their senses and make a fair offer to creditors, we will be filing a lawsuit against Barry and DCG imminently," they tweeted.