Crypto Lender Genesis Slashes 30% of Staff, Considers Bankruptcy

Cryptocurrencies on laptop

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Cryptocurrency lender Genesis Global Trading Inc. laid off 30% of its workforce in a second round of layoffs in six months, and is considering bankruptcy as the FTX contagion continues to spread.

Key Takeaways

  • As part of its second round of job cuts in six months, Genesis Trading will lay off an additional 145 employees.
  • Genesis was hit hard by the collapse of the crypto exchange FTX because it had $175 million locked in an FTX trading account.
  • Genesis also owes $900 million to crypto exchange Gemini, which has criticized the way Genesis is handling the crisis. 

Second Round of Layoffs

In the latest move, 145 Genesis employees will lose their jobs. Last August, the company laid off 260 employees. The job cuts follow the company's announcement Wednesday that it would "reduce costs and drive efficiencies" amid a tough environment.

"While we are committed to moving as quickly as possible, this is a very complex process that will take some additional time," Interim CEO Derar Islim said in a letter sent to clients on Wednesday.

Crypto Lender Said to Be on Brink of Collapse

Though Genesis has not publicly announced that it will file for bankruptcy, the latest reports indicate that the firm is on the verge of doing so. After the FTX collapse in November 2022, the crypto lender suspended withdrawals, as it had $175 million locked in an FTX trading account. When it asked Binance for help raising fresh capital of at least $1 billion, Binance denied the request. 

Genesis is owned by Barry Silbert's Digital Currency Group (DCG), which is also the parent company of CoinDesk, the news outlet that first reported the deteriorating financial condition of FTX in late 2022.

Winklevoss Brothers Are Worried

Crypto exchange and Genesis creditor Gemini is critical of the way Genesis is handling its recent financial troubles. Genesis owes Gemini $900 million, and its founders, the Winklevoss twins, are blaming the parent company, Digital Currency Group.

Cameron Winklevoss on Monday published an open letter directed at DCG Chief Executive Barry Silbert in which Winklevoss claimed that the parent firm was acting in "bad faith" by working slowly on a deal to return the $900 million owed to clients of Gemini's Earn program.

The Bottom Line

The problems surrounding Digital Currency Group and Genesis got worse on Thursday when Silvergate Capital announced it was laying off 40% of its staff. DCG has invested $114 million in Silvergate Capital to support the bank's fintech deposit initiatives.

The FTX collapse continues to rattle the crypto industry, and it doesn't seem that the repercussions will end anytime soon.

Article Sources
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  1. The Wall Street Journal. ''Crypto Lender Genesis Considers Bankruptcy, Lays Off 30% of Staff''

  2. CoinDesk. ''Crypto Lender Genesis Lays Off 30% More of Its Staff.''

  3. Cointelegraph. ''Genesis tells clients it needs more time on financial woes after Gemini demands action.''

  4. Twitter. Cameron Winklevoss. "@cameron.9:02 AM · Jan 2, 2023."

  5. The Wall Street Journal. ''Silvergate Raced to Cover $8.1 Billion in Withdrawals During Crypto Meltdown.''

  6. CoinDesk. ''Digital Currency Group Invests in Bitcoin-Friendly Silvergate Bank.''

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