When cryptocurrency lender Genesis declared bankruptcy, it was a major blow to the digital currency industry as a whole
Genesis, a crypto lending giant that has been widely expected to file for bankruptcy, has done so in a federal court in Manhattan, citing over 100,000 creditors and liabilities between $1.2 billion and $11 billion. The SEC filed suit against Genesis and the Gemini cryptocurrency exchange owned by the Winklevoss twins a few days prior to this filing, alleging that they had offered securities without first registering with the SEC.
CNBC reports that the failure of FTX has sent shockwaves through the cryptocurrency industry, prompting customers to demand withdrawals from exchanges everywhere. According to CoinDesk, Digital Currency Group (DCG), the parent company of Genesis, has suspended dividends this week because it owes creditors more than $3 billion. It was also compelled to assume responsibility for the $1 billion bankruptcy of 3AC.
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Several high-profile collapses in recent months have prompted increased scrutiny of crypto lending and other digital currency-related businesses and calls for greater industry regulation and oversight, as evidenced by the bankruptcy filing and the SEC lawsuit.
As co-founder of Gemini alongside his twin brother Tyler Winklevoss, Cameron Winklevoss took to Twitter to accuse Digital Currency Group CEO Barry Silbert of refusing “to offer creditors a fair deal,” prompting legal action to shed light on the situation.
With the growth and development of the crypto industry comes rising tensions among the industry’s top players, of which this is just one example. What will happen to Genesis, exchanges like Gemini, and other cryptocurrency lending businesses is unclear as the bankruptcy proceedings continue.