Genesis Global Capital, a well-known cryptocurrency loan company, has made the strategic decision to stop offering its derivatives and spot trading services for cryptocurrencies. The company, which is a subsidiary of Digital Currency Group (DCG), announced the termination of these services and gave voluntary and commercial justifications for it. The trading activities carried out by its British Virgin Islands entity will be impacted by this choice.
Genesis’s Withdrawal from Digital Asset Trading
Genesis’s move to halt digital asset trading is not limited to a single entity but extends to all of its associated entities. This strategic shift marks a significant step in the company’s business operations. Notably, Genesis Global Capital had been actively offering trading services through its international arm, Genesis Global Capital (GGC), located in the British Virgin Islands.
This decision follows a similar move by Genesis Global Trading, another entity associated with DCG, which announced the discontinuation of its crypto spot trading services in January. Like the recent announcement, this decision was also attributed to voluntary business considerations.
Related: Gemini, Genesis file to dismiss SEC lawsuit against Earn product
Background and Industry Implications
The Genesis ecosystem has faced its share of challenges in recent times, including legal and regulatory hurdles. In November 2022, GGC suspended withdrawals, citing “unprecedented market turmoil.” Subsequent reports in January indicated that the firm had possibly reduced its workforce by up to 30% before filing for Chapter 11 bankruptcy protection in New York. Additionally, both cryptocurrency exchange Gemini and Genesis faced charges from the Securities and Exchange Commission related to the offering of unregistered securities through Gemini’s Earn program.
The complexities and interrelationships between the various DCG subsidiaries and affiliated crypto firms, including Grayscale Investments, have been a focal point of discussion within the crypto space over the past year. Genesis Global Capital’s challenges were compounded by its reported losses linked to the collapse of the crypto exchange FTX, with the firm attributing its demise to actions taken by Three Arrows Capital.
In August, DCG announced that it had reached an “agreement in principle” with Genesis, allowing creditors to recover a significant portion of their funds. However, creditors subsequently expressed dissatisfaction with the terms, describing them as “wholly insufficient.” It’s estimated that Genesis owes approximately $3.5 billion to its top 50 creditors. This ongoing situation underscores the evolving dynamics and challenges within the crypto industry, where regulatory compliance and financial stability continue to be key focal points for industry participants.
Related: Genesis settlement disrupted by new creditor demands, DCG says