Key institutional crypto player, Genesis, is on the brink of failure; Possibility of “apocalyptic” Bitcoin elimination

Because your humble blogger doesn’t feel all that hot, forgive me for giving you a subtle description of the hesitation and likely collapse of key crypto concern Genesis. However, two excellent tweet storms cover most of the key topic and I will direct you to them shortly.

The FTX spin-off is sure to grab the attention of the business press, pundits, and politicians due to the fact that its Über-Link and more recently idolized upper management turned out to be drug-obsessed incompetent businessmen who seem to have done a very good job of disappearing a lot of money, apparently for their personal use. The level of media noise and upcoming lawsuits (the Southern District of New York and the Bahamas are reportedly starting to file lawsuits) and the inability of supposedly experienced players to find anything wrong are likely to reduce interest in cryptocurrency, especially if other firms fail. due to FTX infection.

If Genesis is one of them, it could be particularly damaging to the ambitions of cryptocurrency promoters to make these speculative coins a serious alternative to fiat. Genesis provided institutional investors as well as big-money players with a traditional set of investment services, collectively referred to as prime brokerage services. It is important to note that, as far as I understand, Genesis was the only real contender in this space. This may sound very attractive (who doesn’t want to be a near-monopoly de facto supplier?), but it is dangerous when you are a large market maker trading (and more importantly, therefore holding large positions) highly volatile assets.

In this way, major institutions can be directly impacted if Genesis fails. And even if they don’t, the prospect they might have would dampen the enthusiasm of institutional investors, especially if unflattering facts come to light during the bankruptcy.

Genesis was hit hard when hedge fund Three Arrows Capital went bankrupt. Genesis provided a $2.4 billion loan. Parent Digital Currency Group Genesis, filed a lawsuit in bankruptcy court in July, or $1.2 billion.

Update from the Financial Times in August:

Cryptocurrency broker Genesis will cut a fifth of its staff and replace its CEO as it calculates the value of a $2.4 billion loan for hedge fund Three Arrows Capital…

Many of the biggest names in the industry, including Voyager Digital, BlockFi and Deribit, were also forced to liquidate some Three Arrows positions when the investment shop failed to meet margin requirements. Court documents showed that Genesis lent the Three Arrows $2.4 billion in under-collateralized loans.

Genesis’ parent company Digital Currency Group, founded by investor Barry Silbert, took over the trading firm’s Three Arrows-related liabilities and filed a $1.2 billion lawsuit in a US bankruptcy filing.

You can see how the story changes as FTX unravels:

This was reported on November 21 by Bloomberg. Genesis was trying to raise money and may have had to file for bankruptcy..

To save you from further waiting:

Some of the highlights:

And this is why Genesis is especially important for the crypto ecosystem. Again, the entire tweetstorm deserves your attention, but some highlights:

So, you heard about the likely big Bitcoin branch here earlier.

And for those interested in the prospects for a realignment of the cryptofield, this tweet storm explains why Genesis is a particularly important infrastructure provider.

Again, the whole tweet storm makes for an important read. To whet your appetite:

As we have repeatedly pointed out, supposedly anti-institutional crypto-entrepreneurs over time began to reproduce a key component of the modern financial system. Genesis provided the necessary plumbing. Even if he manages to fail gracefully, current clients’ positions will be frozen and eventually paid out at a loss. And in the event of a catastrophic big bitcoin dump scenario, who knows what the side effects will be.