Genesis transfers $3b worth of crypto amid bankruptcy

Genesis Trading has processed billions of dollars worth of transactions in recent days to manage creditor payments as part of its financial restructuring efforts.

The cryptocurrency lender, which is facing bankruptcy, has reportedly transferred significant amounts of Bitcoin (BTC) and Ethereum (ETH) in recent days.

Wallets associated with Genesis reportedly moved 32,256 BTC worth around $2.12 billion and 256,775 ETH worth around $838 million over the past three days. These transactions included large transfers of 16,600 BTC ($1.1 billion) and 166,300 ETH ($521.1 million) in a single hour, suggesting a redistribution of assets to meet creditor claims.

This activity is part of Genesis Trading’s efforts to manage payments to creditors as part of its ongoing financial restructuring.

The root of all Genesis Trading problems

Genesis Trading’s legal and financial troubles began with the collapse of cryptocurrency exchange FTX in November 2022, leading to market contagion.

Genesis was hit hard after losing access to $175 million worth of crypto assets locked in its FTX trading account, primarily through its derivatives business. As a result, Genesis stopped making withdrawals and filed for bankruptcy in January 2023.

In May 2023, Genesis reached a landmark $3 billion settlement with New York over allegations that it defrauded 230,000 investors through the Earn program. In October 2023, a New York bankruptcy judge approved a $175 million settlement between Genesis and FTX, including the dismissal of multiple claims against Genesis.

The court authorized Genesis to distribute cash and crypto to its creditors, which could explain the movement over the past three days. Refunds should cover approximately 77% of the value of the total claims.

Genesis’ asset liquidations and payouts add to a growing list of supply shocks in the cryptocurrency market and reflect broader instability in the sector.

The cryptocurrency market continues to face supply disruptions due to the German government’s recent sale of 50,000 BTC, the rollout of bankrupt exchange Mt. Gox, and the impending sale of the U.S. government’s BTC stockpile.