The fallout from FTX and Luna continued this week with the bankruptcy announcement of Genesis Global, one of the industry's oldest trading and lending firms. Genesis is owned by Digital Currency Group (DCG) and has been operating since 2013, pre-dating household names like Binance, Metamask, and Ethereum itself. The firm was already in trouble earlier in the year after it reported a $1.2B loss as a result of the collapse of 3AC, which itself went bankrupt when its $200M $LUNA position evaporated overnight. The final nail in the coffin was, of course, at the hands of SBF, whose FTX exchange imploded with over $226M in debts to Genesis. In the bankruptcy proceedings, Genesis reported debts exceeding $5B, but just $150M left in the bank.
Amongst Genesis’ biggest creditors is Gemini, the US-based exchange owned by the Winklevoss twins. They’ve been particularly vocal on Twitter regarding their struggles with Genesis, and they should be: over 340,000 Gemini customers have lost money. The twins went so far as to publicly call for the ouster of founder Barry Silbert on January 10th, claiming that Silbert covered up the 3AC losses with capital that DCG didn’t actually have. DCG quickly responded to the Winklevoss allegations by calling their open letter a “desperate and unconstructive publicity stunt.” A week later, the various Genesis business entities all filed for bankruptcy.
Quick side note: Genesis Global, owned by DCG, is completely separate and unrelated to Genesis Block, which is a similar crypto trading firm based out of Hong Kong. Genesis Block was a very visible fixture in the Asian trading scene, before being acquired by FTX and then reportedly shutting down in the dumpster fire of 2022. Last year, GB had also acquired Satoshi Citadel Industries, one of the oldest licensed exchanges here in the Philippines, which means that at least one of our local platforms were directly contaminated by the FTX contagion.
Interestingly, the markets appear to have already priced in the Genesis collapse and were not swayed at all by the announcement. I made the wrong call on Wednesday morning and swapped my $BTC and $ETH long positions to pessimistic shorts. I even posted about my moves along with the breaking news of Genesis’ incoming bankruptcy announcement. But other than a brief dip on that same day, I didn’t see any evidence that the markets were actually slowing down. I ended up having to swallow a $300-400 loss on the bad shorts and then flipping back to longs on Friday morning.
To my pleasant surprise, the markets have gone up nearly 10% since then, with $BTC at $22,600 and $ETH at $1,650. This allowed me to recover all my losses and even make a couple extra hundred bucks on top, which is always a nice way to kick off a weekend. If you’ve been following along with my trading journey, I’ve been using ApeX as my primary futures exchange. You can give it a try by signing up with my referral link: https://pro.apex.exchange/referral?kol=LP1YZ10Q
On Monday afternoon, I’ll be in Baguio City teaching an NFT workshop at Hoka Brew. If you’re around and want to hang out, just sign up for free on our Eventbrite page. Otherwise, see you next week, cryptofam!