# Genesis Global (2013 – 2024)

- URL: https://girisimcikafasi.com/en/startup-graveyard/genesis-global/
- Sector: Crypto and blockchain
- Country: United States
- Total funding: unknown
- Cause of closure: Macroeconomic crisis

## What did it do?

Genesis, founded in 2013, offered crypto trading, lending and custody to institutions and wealthy clients. It was a subsidiary of Digital Currency Group. Through the Earn programme launched with Gemini in 2021, offering returns of up to 7.4%, it also reached retail money. It lent the crypto it gathered on to institutions.

## Why did it shut down?

In 2022 Three Arrows Capital was liquidated after the Luna/TerraUSD collapse; Genesis had about USD 2.4 billion in loans to the fund. Heavy losses were disclosed in June and July 2022, DCG took on some of the debts and chief executive Michael Moro left in August 2022. After FTX's bankruptcy, withdrawals stopped on 16 November 2022. On 19 January 2023 the company filed for Chapter 11 with about USD 5.1 billion of liabilities. A USD 2 billion settlement with the New York Attorney General was approved in May 2024; Genesis did not admit the allegations and stopped doing business in New York. The wind-down plan took effect on 2 August 2024 and distributions to creditors began.

## The story

Genesis began in 2013 as a crypto trading desk for institutions. Under Digital Currency Group it grew through lending and custody. In 2021 the Earn programme with Gemini, offering up to 7.4%, brought in ordinary investors' money too; New York investors put in more than USD 1.1 billion.

In 2022 the machine broke. The fall of Luna was followed by Three Arrows Capital, and the fund's roughly USD 2.4 billion of loans from Genesis did not come back. DCG took on part of the debt and chief executive Michael Moro left.

FTX failed in November, about USD 827 million of loans were called and Genesis stopped withdrawals on 16 November 2022. The Chapter 11 filing came on 19 January 2023.

In May 2024 the court approved the wind-down plan and the USD 2 billion settlement with the New York Attorney General. Distributions began in August 2024. The case shows why a model that turns short-term money into long-term risk cannot survive one bad year.

## Lessons

- In lending, concentration kills, not size. If you have lent USD 2.4 billion to one client, that client's risk is your company's risk; set your own single-counterparty limit.
- If customers can withdraw at any moment, do not lend their money for long periods. A maturity mismatch becomes a withdrawal queue within days of a shock like FTX.
- Help from a parent company is a temporary bridge. A group taking over the debt does not solve the problem; show the hole to an independent auditor before carrying on.

## Sources

- [New York Attorney General and Genesis secure $2 billion settlement following judge's sign off](https://www.theblock.co/post/295435/new-york-attorney-general-and-genesis-secure-2-billion-settlement-following-judges-sign-off)
- [Bankrupt Genesis Settles Fraud Charges in New York](https://www.financemagnates.com/cryptocurrency/bankrupt-genesis-settles-fraud-charges-in-new-york)
- [Court Confirms Genesis's Chapter 11 Plan and Approves NYAG Settlement](https://www.silicon.co.uk/press-release/court-confirms-genesiss-chapter-11-plan-and-approves-nyag-settlement-maximizing-recoveries-for-creditors)
- [Digital Currency Group](https://en.wikipedia.org/wiki/Digital_Currency_Group)
- [Genesis Global Holdco $3 billion wind-down plan](https://elevenflo.com/blog/genesis-global-holdco-3-billion-wind-down-plan)