​​Genesis May Be Facing Bankruptcy. Could It Take DCG Down With It? - Ep. 429

Unchained

Ram Ahluwalia, CEO and co-founder of crypto-native investment advisor Lumida, and Samuel Andrew, crypto author and analyst, talk about the financial situation at Genesis and parent company Digital Currency Group (DCG). The collapse of FTX has dealt crypto lender Genesis another major blow, with the firm halting withdrawals and DCG stepping in to help. Now the two face a range of suboptimal outcomes in the face of massive debts. Ahluwalia and Andrew discuss what could come next, and what should be learned from the recent debacles.

Show highlights:

• why Genesis and DCG are so important for the crypto sector
• Ram's explanation of the "Grayscale trade" and why it is relevant to understand the current crisis
• the ghost of Three Arrows Capital and the origins of Genesis' problems
• why Sam thinks Genesis was "reckless" in its loan underwriting
• what a spot Bitcoin ETF would mean for Grayscale's revenue
• what options Genesis and DCG have to weather the storm
• whether it makes sense for Genesis to file for bankruptcy
• why Ram thinks Genesis lending product needs to be be shut down
• why Gemini and its Earn program loom large in the Genesis situation
• the risks of enforcement action from regulators
• what the most likely outcome is for Genesis and DCG and whether creditors will be made whole
• whether there will be broader contagion stemming from Genesis and what other crypto companies could be in trouble
• the problems of leverage and why crypto's "shadow banks" need regulation

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Crypto.com

Chainalysis

Minima

Ram:

• Twitter
• Ram’s thread on GBTC
• Previous Unchained episodes:
• Why Genesis Could Very Well Be Insolvent, Not Just Illiquid

Sam:

• Twitter
• Substack

Episode Links

Genesis:

• Unchained:
• Genesis Warns of Bankruptcy If Funding Plans Fail: Report
• On-chain Analysts ID 432 GBTC Addresses After Grayscale Says No to Proof-of-Reserves
• WSJ: Crypto Lender Genesis Asks Binance and Apollo for Cash
• Decrypt: Digital Currency Group Says No Imminent Threat Despite Owing Genesis $575M
• The Block: DCG CEO Barry Silbert updates shareholders, says company will emerge 'stronger'
• Previous coverage of Unchained on Genesis:
• ‘The Last Big Whale’: Why the Crypto Contagion of 2022 Eventually Hit Genesis
• Adam Cochran on Why Crypto Prices Will Be Down Bad for the Next Six Months
• Is the Collapse of Crypto Lending Over, or Is It Just Starting?
• The Chopping Block: SBF Wants to Win in the Court of Public Opinion. Will He?

FT: Crypto broker Genesis owes Winklevoss exchange’s customers $900mn

WSJ: Rising Tether Loans Add Risk to Stablecoin, Crypto World

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