Genesis is moving $1.5 billion in bitcoin and ether, likely for creditor repayments

Wallets linked with Genesis Trading, the crypto lender owned by conglomerate Digital Currency Group, moved over 16,000 bitcoin (worth $1.1 billion) and 166,000 ether ($521 million) on Friday, according to blockchain data provider Arkham Research. This likely indicates that Genesis Trading will begin to repay its creditors following a blowup in 2022. 

This comes a little over a year after Genesis reached an agreement to repay $1.5 billion to clients of the crypto exchange Gemini, impacted by the implosion of the Gemini “Earn” crypto credit platform. Gemini had used Genesis to receive yields on Earn customers' deposited crypto, which Genesis then loaned to the now-bankrupt Three Arrows Capital hedge fund. 

Gemini announced in May that its Earn users had received all their digital assets back in kind, meaning that Genesis could move on to repaying its remaining creditors. In a January 2023 court filing, Genesis listed more than $3 billion in claims to its top 50 creditors, including Gemini, trading giant Cumberland and VanEck’s New Finance Income Fund.

Closing the chapter

Friday’s move represents the potential closing of a long and sordid chapter in the history of cryptocurrency, an industry rocked by the failure of several key companies during the 2022 market downturn. 

A contagion effect that began with the collapse of the multi-billion dollar stablecoin project Terra then knocked down several highly leveraged firms like 3AC and Celcius and ultimately led to the bankruptcy of FTX and Genesis Global. These failures showcased exactly how intertwined and fragile the industry had become during the pandemic-era bull market. 

Genesis disclosed in its January 2023 bankruptcy filing it had upwards of 100,000 creditors and potentially as much as $10 billion in liabilities. It is not yet clear where Friday’s transfers are being directed. Genesis has not responded to a request for comment by press time. 

The company’s restructuring and repayment process was made more convoluted by the parent company DCG’s $1.1 billion promissory note (essentially an IOU to be paid in 2032) to Genesis to help paper over a massive hole in its balance sheet primarily caused by losses at 3AC and later FTX sister company Alameda Research. 

New York Attorney General Letitia James filed a civil suit in October 2023 against DCG, Genesis, Gemini and many of its executives for conspiring to defraud investors by covering up $1 billion in trading losses and “corporate puffery” that hid Genesis’ insolvency. Genesis closed withdrawals in November 2022.