Market Meditations | November 22, 2022

After Genesis came Exodus. It is a story as old as time.

  • Genesis is a giant in the crypto trading and lending business.
  • Initial concerns were raised when they were revealed to be the biggest creditor in the 3AC liquidation proceedings. However, their parent company DCG stepped in to take on the claim.
  • But with the fall of FTX and Alameda, those fears are back and bigger. Despite claiming on November 8th “no material net credit exposure“, they have since backtracked with a series of tweets.
  • Their last tweet came a week ago when they announced they had “taken the difficult decision to temporarily suspend redemptions and new loan originations in the lending business“.
  • A Bloomberg article yesterday warned of potential bankruptcy if they could not raise $1 billion, but this was swiftly denied in an emailed statement.
  • Parent company DCG touts themselves as the “epicenter of the bitcoin and blockchain industry” on their website. But the bigger they are, the harder they fall.
  • Many other companies use Genesis to earn yield for their customers, including the Winklevoss brothers’ Gemini, and the community is starting to analyse what the domino effect might be.

Other well-known portfolio companies include Grayscale, Foundry, and CoinDesk. And for a crypto collapse that started with a CoinDesk article, it’s hard to miss the irony that they could also suffer in the aftermath.