The Facts
Genesis Capital, a cryptocurrency lender, filed for bankruptcy in New York late on Thursday, after being charged by the US Securities and Exchange Commission (SEC) with illegally selling crypto.
According to bankruptcy documents, lenders' assets and liabilities are estimated to be worth between $1B and $10B. Parent Group Genesis Global Holdco and lending unit Genesis Asia Pacific also filed for bankruptcy protection.
The Spin
Narrative A
The entire FTX saga has shown the corrupt and volatile nature of the crypto industry at large, and its regulators. As the company scrambles to find assets for paybacks, the crypto market is tanking. Entities like the federal Southern District of New York are probing how wide-ranging potential offenses are — with bribery, fraud, and campaign finance violations all in play. Genesis Capital is just the latest casualty.
Narrative B
Despite the myriad problems exposed by the FTX fiasco, cryptocurrency can't be counted out as a viable investment. With wages slowing and the service sector contracting in the US, it's possible that the Fed will ease up on interest rate hikes — something very positive for the crypto market. A market rebound may be on the way.