The major institutional crypto player, Genesis, is on the brink of failure; ‘Apocalyptic’ Bitcoin Liquidation Possibility

In view of the fact that your humble blogger doesn’t feel very hot, forgive me for giving you a thin treatment of the wobbles and potential breakdown of the main cryptographic problem, Genesis. However, there are two excellent Twitter storms that cover most of the major areas, and I’ll point you to them shortly.

FTX’s relaxation is sure to dominate the business press and the attention of pundits and politicians given how its Uber-connected and likable senior officials have recently been exposed as drug-dealing misfits who don’t seem to have done a very good job of disappearing much of the navigator, supposedly for their use. profile. The level of media hype, upcoming lawsuits (both the Southern District of New York and Bahamas are said to be filing) and the player’s supposed failure to find anything wrong should dampen interest in cryptocurrency, especially if other companies fall under the FTX infection.

If Genesis is one of them, it would potentially be particularly detrimental to cryptocurrency promoters’ ambitions for these speculative currencies to become a serious alternative to fiat currencies. Genesis has offered a traditional group of investment services together called prime brokerage to institutional investors, such as in big-money companies. More importantly, as I understand it, the Genesis was the only real competitor in that space. This might sound really attractive (who doesn’t want to be a de facto provider of a monopoly?) but it’s dangerous when you’re a big market maker (and more importantly, holding big positions in) highly volatile assets.

So large corporations may have direct exposure if Genesis fails. And even if they don’t, the prospect they might have dampens the enthusiasm of institutional investors, especially if unpleasant realities come to light during the bankruptcy.

Genesis took a hit when hedge fund Three Arrows Capital failed. Genesis has loaned $2.4 billion. Genesis’s parent cryptocurrency group filed a lawsuit in bankruptcy court in July for $1.2 billion.

Update from the Financial Times in August:

Cryptocurrency brokerage Genesis will cut a fifth of its staff and replace its CEO as it calculates the cost of lending $2.4 billion to hedge fund Three Arrows Capital…

Many of the best-known names in the industry, including Voyager Digital, BlockFi and Deribit, were also forced to liquidate some Three Arrows positions when the investment store failed to meet margin calls. Court documents showed that Genesis lent Three Arrows $2.4 billion in secured loans.

Genesis’ parent company Digital Currency Group, which was founded by investor Barry Silbert, has taken over the company’s trading liabilities related to Three Arrows and filed a $1.2 billion claim in the US bankruptcy case.

You can see how the story changes as FTX unfolds:

Bloomberg reported on November 21 that Genesis was trying to raise funds and might have to file for bankruptcy.

To keep you in suspense:

Some highlights:

This is why Genesis is particularly important to the crypto ecosystem. Again, the tweetstorm is very much deserving of your attention, but a few highlights:

So I heard about the possibility of a large chunk of bitcoin here early on.

And for those interested in the prospects for repackaging the crypto space, this storm of tweets explains how Genesis is a particularly important infrastructure provider.

Again, the whole tweet storm makes for a must read. To stimulate your appetite:

As we have pointed out time and again, these supposedly anti-institutional crypto entrepreneurs have over time ended up replicating a key component of the modern finance system. Genesis provided some basic plumbing. Even if he succeeds in failing safely, existing clients’ positions will be frozen and eventually paid at a loss. And in the catastrophic scenario of a massive dump of bitcoin, who knows what the implications would be.

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