According to the latest reports, Genesis Trading, the lending arm of the greater Digital Currency Group (DCG) has started a new wave of layoffs, which will result in a reduction of its workforce by 30%. This has led to a strong indication of the financial instability that the crypto giant currently faces and raised doubts about its sustainability.
The company sustained significant losses as a result of the provision of loans to the trading firms like Alameda Research, and to prominent cryptocurrency hedge fund Three Arrows Capital back in 2022. Due to the financial crisis faced by these firms, bankruptcy petitions were submitted to courts while cryptocurrencies took a sharp nosedive; erasing all the gains they made earlier.
As reported earlier on CoinGape, Genesis had laid off another 20% of their 260-person workforce during the summer of 2022. However, the failure of FTX only made matters worse for the company. According to information obtained, Genesis had extended credit in the amount of at least hundreds of millions of dollars to FTX’s sibling trading firm Alameda Research, before the latter’s collapse in November. It also made sizeable contributions to the 3AC hedge fund, which was reported to be around $2.4 billion.
A spokeswoman of Genesis was quoted as saying:
As we continue to navigate unprecedented industry challenges, Genesis has made the difficult decision to reduce our head count globally. These measures are part of our ongoing efforts to move our business forward
On November 16th, Genesis temporarily ceased new loan funding and principal repayments. Due to Genesis’s action, Gemini, a cryptocurrency exchange that collaborated with Genesis on a yield scheme, has also suspended withdrawals worth $900 million from their Earn program. For survival, Genesis has even turned to investors for a $1 billion emergency loan. Attempts were made to secure funding from private equity powerhouses like Apollo Global Management and leading crypto exchange Binance.
Increasing interest rates and concerns about an economic slowdown have caused investors to flee riskier assets, which has roiled the cryptocurrency market. Furthermore, recent bankruptcies in the cryptocurrency sector have added to the uncertainty prevailing in the market.
This is a developing story and is being frequently updated.
The post Just-In: Genesis Fires 30% Of Its Staff; Is It Next To File For Bankruptcy? appeared first on CoinGape.