Digital Currency Group’s subsidiary, Genesis, which declared bankruptcy earlier in January, is enduring further challenges posed by the downtrending crypto market. The firm, known for its digital asset lending services, is now discontinuing its cryptocurrency spot and derivatives trading operations entirely.
While Genesis hasn’t directly communicated the rationale behind this move, an official from the company verified the impending changes. In a recent email statement, the spokesperson confirmed that derivatives trading would terminate immediately. Concurrently, their spot trading services are slated to conclude on September 21.
A memo from September 14 clarified, “Genesis has resolved to discontinue its digital asset spot and derivatives trading services through GGC International, Ltd. (GGCI).”
GGCI, short for Genesis Global Capital International, Ltd., is registered in the British Virgin Islands and operates as a fully-owned subsidiary of Genesis Bermuda Holdco Ltd.
The company emphasized, “This decision was proactively taken for strategic business reasons. With the discontinuation of services via GGCI, Genesis has ceased to provide trading services across all its business divisions.”
It’s noteworthy that earlier in the month, the US-centric Genesis Global Trading, despite its affiliation with the Digital Currency Group and remaining unaffected by the parent company’s January bankruptcy, declared its intention to close its cryptocurrency spot trading operations by September 18.
At that juncture, Genesis indicated its ongoing dialogue with pertinent regulatory agencies. This includes the likes of the New York Department of Financial Services and the US Securities and Exchange Commission (SEC).
Effects of Bankruptcy
Once a prominent name in the realm of derivative services, Genesis found itself embroiled in a significant controversy, which contributed to its downturn. The debacle began when Gemini, the crypto exchange owned by the Winklevoss twins, reportedly lent a staggering $900 million of its customer funds to Genesis.
However, complications soon arose, as these funds became ensnared, hindering Gemini Earn customers from accessing their assets. This issue impacted a substantial client base, approximated at over 340,000 individuals. The situation escalated when Cameron Winklevoss, one half of the Winklevoss duo, publicly chastised Genesis CEO, Barry Silbert. He accused Silbert of deliberately employing “stall tactics” to prolong the inevitable declaration of Genesis’s bankruptcy.
The challenges facing Genesis were compounded when, on January 12, 2023, the US SEC brought charges against both Genesis and Gemini. The regulatory body alleged that the two entities had engaged in the provision of unregistered securities via the Gemini Earn product.
Only a week after this development, Genesis resorted to Chapter 11 bankruptcy proceedings. However, it’s noteworthy that the aspects of spot and derivatives trading, as well as their custody businesses, remained untouched by the bankruptcy claim and sustained their operations. But the volatile crypto market landscape eventually coerced the termination of these trading services as well.