According to the report, troubled cryptocurrency lender Genesis Global Capital may declare bankruptcy before the week is over. Genesis had been engaged in private negotiations to try to raise money. Since the Three Arrows Capital hedge fund failed last summer, Genesis, which had some exposure to FTX, has struggled.
If Genesis files for bankruptcy, it might be more difficult for clients to get their money back. This includes Gemini Earn members who cannot access their cryptocurrency because Genesis stopped allowing withdrawals on November 16. For its Earn product, Genesis partnered with Gemini to provide loans.
The creators of Gemini, Cameron and Tyler Winklevoss, are negotiating with Genesis’ parent firm, Digital Currency Group, in an increasingly tense effort to recoup the money owed to its clients. According to Gemini, approximately 340,000 Earn customers have access to almost 900 million dollars on the site.
The SEC brought accusations against Gemini and Genesis last week for the sale of unregistered securities. The SEC accusations and bankruptcy reports cast doubt on the legality and security of numerous crypto lending schemes. Genesis is not the first cryptocurrency lender that has run into difficulty. Other cryptocurrency lenders like Celsius, BlockFi, and Voyager have previously declared bankruptcy.
The challenge for cryptocurrency investors is how interconnected the various platforms and exchanges are. It’s difficult to predict what shockwaves a bankruptcy by Genesis may cause and whether other businesses will follow. Prices for cryptocurrencies fell after a week of slight increases. For the first time since November, Bitcoin (BTC) had surged past the $21,000 threshold, then it dropped 4%.
It’s critical to consider where your funds are kept if you possess cryptocurrencies. A lot of people keep their digital currencies on the cryptocurrency exchange from where they purchased them. It’s more practical, and a variety of platforms provide numerous options for earning income on your funds. Unfortunately, cryptocurrency exchanges don’t provide the same level of security as a bank or brokerage company.
