Crypto lender Genesis Global Capital, one of the subsidiaries of Barry Silbert’s DCG reportedly filed for bankruptcy on Thursday. In a report by Bloomberg, this could already be imminent after the crypto lender company halted customers’ redemption on Nov. 16 after FTX’s crash. The recent event is undeniably one of the horrific aftermaths of FTX’s exchange controversial downfall.
Two of the company’s most prominent lenders were Three Arrows Capital and Alameda Research. In his statement, 3AC’s co-founder Kyle Davies revealed that the company took a fatal hit after its final position was liquidated on FTX. Alameda also lost billions after engaging in high-risk bets and eventually got liquidated after Terra Luna’s collapse and crypto market meltdown. Both companies were now in bankruptcy proceedings.
The crypto lender company is also embroiled in controversy and now faces a lawsuit filed by the US SEC and its former partner Gemini exchange for allegedly engaging in an unregistered offering and selling securities via the Gemini Earn program.
Also, in a press release, Barry Silbert, Digital Currency Group, and Genesis Global Capital now face a class arbitration filed by 19 clients together with creditors who lent Genesis their crypto assets to the crypto lending company which it refuses to return.
On Jan. 2, Cameron Winklevoss, co-founder of the Gemini crypto exchange posted an open letter on Twitter addressed to the DCG founder Barry Silbert. He stated:
“You continue to refuse to agree to a timeline with key milestones. Every time we ask you for tangible engagement, you hide behind lawyers, investment bankers, and process. After six weeks, your behavior is not only completely unacceptable, it is unconscionable.”
The two parties have engaged in a word war on the social media platform. Winklevoss alleged that DCG borrowed $1.675 billion from Genesis. But Silbert was quick to deny the allegation and shot back at Winklevoss claiming that the crypto exchange did not respond to a proposal submitted by DCG and Genesis on Dec. 29.
The falling out between the Winklevoss brothers and Silbert could result in another lawsuit against the DCG founder. In his statement, Cameron Winklevoss revealed:
“We have been preparing to take direct legal action against Barry, DCG, and others.”
In total, Genesis owed more than $3.5 billion to its 50 creditors and almost $800 million to Gemini’s Earn users. The crypto lending company has been in negotiation with its creditors’ represented by major law firms Kirkland & Ellis and Proskauer Rose according to a report by CNBC.