Topic: Genesis' crypto lending (Genesis Global Capital) halts withdrawals (Read 382 times)

News update.

It appears Barry Silbert's problems concerning Genesis Global Capital is having problems. Creditors have rejected the restructuring plan. Do they not trust Barry? I am quite certain the Winklevii do not hehe. We can only speculate that the deal is more advantageous only to Barry than the creditors. This is not how to do business, I reckon.



Genesis Global filed a motion asking the courts to supply a mediator after some creditors backed out of the bankrupt crypto lender’s restructuring plans.

Genesis owes around $3.5 billion to its top 50 creditors, including Gemini — the exchange co-created by the Winklevoss twins.

Source https://blockworks.co/news/genesis-petitions-for-mediator

Agreed. There is nothing special about Ark Invest, however, we cannot compare Ark and FTX as something similar unless you are also implying that Ark is also a criminal enterprise very much like FTX. If that is the argument, I reckon you are implying that anything can be a ponzi scheme? Would it be correct for us to tell everyone that Black Rock Future Tech, Goldman Sachs Future Tech, VanEck Bitcoin Strategy or Grayscale Bitcoin Trust are ponzi schemes only because FTX was a money laundering operation and also a ponzi scheme? That would be quite head shaking hehehehe.

If I would have told you that SBF is not the JP Morgan he thinks he is, that behind the billions in FTX there are just a couple of millions, that their internal documents were stored on emails, that there is no accounting being done, that nobody knew who really worked there or not,  how would you have reacted when you saw FTX as the everything killer that might take over the world?

If the Madoff scheme was allowed to happen for years, if FTX managed to fool everyone, then what's so special about ARK that it can't be a failure too? Remember that ARK did all the past profits on booming markets, when the shit has finally hit the fan they are losing billions, just like cryptos, and if those can go bankrupt, what's stopping the same from happening here too?

Basically, the whole defense you put for AK is, no this can't be real, cause...I don't want to. 


Guess not:
https://www.nytimes.com/2022/11/22/business/dealbook/genesis-crypto-restructuring-adviser.html
Oh, and they need 2.8 billion just to cover debt at this point.

Are you telling everyone that all of Ark Invest's exchange traded funds and declared profits from these funds are ponzi schemes and fake profits? Also, Cathie Wood is a scammer very much similar to Bernie Maddoff? I admire skepticsm from this people of the forum, however, the comparison is very wrong and head shaking.

In any case, has anyone found new updates if Barry Silbert and Genesis Global found a debtor to give them a loan of $1 billion?

Part of the issue now, and it's all IMO is what existed before the 2008 banking implosion. And to be 100% up font if you bother to do ANY research you can see it was evident that things were going sideways by mid 2007 when interest rates did fall off a cliff. But anyway, back before then you could ALWAYS find a SAFE investment in the 6% range, A+ bonds, some CDs, and so on. To the point that people didn't even bother to move money for an extra 1% here and there.

Then 2008 happened. And you could *not* GET that 1% in a SAFE investment. You could get more but there was risk.

Now people put out these numbers like 8%, other people remember what it used to be like, so 8% does not seem that out of hand since you used to be able to get 6%.
Then greed takes over. And we know how this all ends up.

-Dave

So was Madoff!


Oh yes, we have already the data:

https://www.barrons.com/articles/cathie-wood-ark-innovation-etf-losses-51648812055

Cathie Wood's flagship ARK fund suffers the biggest monthly outflow in nearly a year as performance continues to suffer


And now we know the reason for her aggressive BTC to 1 million calls.
Popcorn time, let's see how much of those previous gains were lies and how much other lies, might add up to 100%, just like Madoff!

You should do your research on her. Cathie Wood is one of the most celebrated hedgefund managers for outperforming the whole traditional market for the last 8 years. Her hedgefund is Ark Invest which concentrates their investments in disruptive technology including bitcoin. However, we have not yet witnessed how investments in disruptive technology might perform during a recession.  I speculate that it might not be very good hehe.

In any case, agreed and because Genesis is not a ponzi scheme like FTX and Alameda Research, it might be bailed out by someone in the cryptospace.

FTX losses $8 billion, somebody buys $4 million of shares, we just need about 2 000 more of these and maybe we will get back in the system the same amount of money that has evaporated. Of course, without any guarantee, this new batch of billions won't have the failure of the previous one.

Viewing this from the sideline and not caring a bit about them it's so damn amusing, I remember how there were discussions about how FTX move to buy the failed business was such a great move, how it will help with taxes, the whole blood on the street, and now after that entire fallout, some authors and some "investors" are just promoting the same non-sense.
Let's see how this will go, if Genesis fails also, I hope we will finally get rid of the whole thing with investing in companies that leverage your money in a Ponzi scheme and we stick to buying bitcoins and holding our bitcoins. If a fund can't invest legally in BTC then maybe it's far better to not invest in anything related and keep it traditional than making the mess that pension fund did.

The name doesn't ring a bell. Still, she may not be alone in this, since I see Genesis Capital has "no plans to file bankruptcy imminently" and the bitcoin price seems to be recovering (probably meaning a bit more confidence).

I start thinking that some of the businesses with a little better background may be helped out or bought by those who have money. Pretty much standard operations during recession (and some may have had money prepared exactly because recession was/is at the horizon).

@NeuroticFish. Cathie Wood hehehee. I am not very confident on her investment decisions since the market began to reverse from bull to bear. It appears that what some of the wisest men of trading have said is true. Everyone can look like be a genius during a bull market, however, the real geniuses will be seen during a bear market.

The person to watch during a bear market is Michael Burry. Everyone can check his investment decisions through Scion Capital's 13F filings.

1. The number of individuals having money at FTX was huge. The number of individuals being invested in FTT was not small either, I think. They're still angry, especially as Sam is still free and more of his ties come out every day.
2. People care more on what has already happened to them than to what might happen to others.
3. Media tries hard to milk every click and view on these topics, hence both directions - Sam/FSX/Alameda and what other services may be affected/fall - are monetized heavily.

At this point people who have lost all their coins don't care if bitcoin rises and falls, and they're many. So many news, alarming and well documented, may go rather unnoticed (or way less noticed compared to the boring days, at least). Plus keep in mind the powerful bears may try to use current panic in their advantage too. All in all, I think that Bitcoin cannot go much lower (we're down from 69k to 15.5k), so those who still have coins won't be that much impressed by news any longer either.

So in the grand scheme of things Genesis Global collapse (and others' too) would not be a huge surprise, but also may not be perceived as the end of the world. We're past that (FTX had that that effect). I guess that only Binance's demise could take away that "crown". But we seem to be lucky and that doesn't seem to be at the horizon.

---

Edit: it looks like some of the people with money start buying in parts of the exposed / falling businesses. This can loosen the pressure.
Cathie Wood Buys $1.4M Of GBTC — Even As World's Largest Bitcoin Fund Faces Pressure From Genesis Fallout

How I wish that this was true. What I see from all this mess is that a minority will switch to self-custody solutions while others will say they tried Genesis, FTX, Celsius, etc., they all failed them, so it's now time to move their money into Binance, Coinbase, or KuCoin...

You are forgetting they will be enticed to take part with a $20 voucher for McDonalds with unlimited Coca Cola refills or something similar that they will gladly accept. It's all about bread and circuses.

This might be where it will be the community who will be biting the dust after another dump on bitcoin to $10k. However, it appears that we underestimating the negative impact of Genesis Global's collapse on the cryptospace. No one is talking about it and much of the conversations and the arguments are still on FTX and Alameda Research. This might be the most shocking news because no one appears to be paying attention that Genesis Global is owned by Barry Silbert's DCG.

Is this only fud or are news writers beginning to be correct as some of them were correct in their speculations on FTX?



Now, fears are swirling that $10 billion bitcoin and crypto giant Digital Currency Group (DCG) could be in trouble after its crypto lender Genesis was forced to pause withdrawals and reports emerged it's seeking an emergency $1 billion loan.

Ahead of the withdrawal suspension, Genesis requested an emergency loan of $1 billion from investors, it was reported by the Wall Street Journal, citing a leaked fundraising document that described a "liquidity crunch due to certain illiquid assets on [Genesis'] balance sheet."

"There has been a target on Genesis's back for days," Joseph Edwards, an investment partner at Securitize Capital, told Reuters, adding it's "a signal of worse outcomes" for the crypto market due to Genesis' close links with brokers, family offices and money managers.

Source https://www.forbes.com/sites/billybambrough/2022/11/20/in-huge-trouble-10-billion-earthquake-could-be-about-to-cause-bitcoin-and-ethereum-price-chaos/

The system could have worked if the CEOs and their teams weren't greedy scammers. Some of these platforms had billion of dollars on their wallets. 0,5% of a billion is enough money to cover operational costs of an online platform. Expenses shouldn't be that high, because they don't have physical agencies like traditional banks. Number of employees should also be reduced.

The proposal was to put the interests of the customers and investors above the interests of the businesses' owners. People expected individuals running those companies wouldn't set huge wages for themselves, but they were wrong. They were even greedier than banksters and completely messed up the ecosystem, especially due to schemes involving native tokens and other volatile altcoins pumped with bitcoin from depositors.

And if at some point the company had to slow down, they could be transparent with investors and tell them interest rates were going to be reduced for a while, so they could continue operating smoothly. And native tokens should never be pumped with customers' funds. That was a big mistake, as it was to borrow money from other companies for the same purposes, which subsequently borrowed more money from other companies until all of them are falling apart.

The issue with Gemini going offline was related to AMZ, and places that rely on those kinds of hosted back ends, be it Microsoft, Amazon, Google, whatever. Will continue to see issues during spikes. Not because of anything evil, but due to the nature of their services.

Something like this happens.
The 'cloud based' back end should be able to ramp up to accommodate all the extra traffic.
BUT....
Every other crypto service that is also hosted in the 'cloud' that uses the same provider is also getting hit.
So, now everything is getting slow. Said provider is bringing things up and online as quick as can be done.
While other people are seeing the other serveries slow down and go offline they go and check on their accounts which adds more strain.
Service falls over....

And just to be clear, there is no such thing as the cloud, it's just hosting on someone else's servers.

-Dave

There are some people who speculate that it might cause another market dump. According to some information being shared in social media, Genesis needs a loan of $1 billion for their cashflow. If they do not get the loan by next week and because Genesis is owned by DCG who also owns Grayscale, they will need to sell the bitcoins or the altcoins they have in their treasury. They have 600k bitcoins and 3.1 million ETH.

If DCG sells to save Genesis, it might dump the price lower than $16k.

Also, some of DCG's biggest debtors are Alameda Research and 3 Arrows Capital. DCG is also an investor in FTX. They have lost funds.

This is from Arthur Hayes after news about Genesis began circulating.



Y’all ready for this?
$BTC 10k my fiat is ready!!!

https://mobile.twitter.com/cryptohayes/status/1592876226632626176

You are right, I stand corrected.

How is this case "DeFi" though? FTX, Alameda, and Genesis Global Trading Inc are literally 100% centralized custodian companies that just went insolvent because of mismanagement (and shady stuff). Nothing much related to protocols here.

So Gemini crypto exchange went offline yesterday following this tweet 



They claim that they experienced an Amazon Web Services EBS outage with one of their primary databases, the exchange was restored after sometime, but you can never trust what those folks say.

A huge outflow of coins and token from the exchange has been observed according to on chain data. Careful guys. Be on the safe side.

I hope defi crap is done for good, but I have a feeling we are going to see something similar in next bull run, whenever that is.
Price of Bitcoin can certainly go much lower, but I know people are getting ready to load up again if it goes around 10k.

Banks are the ultimate Ponzi scheme, especially when you combine them with constant inflation and decreasing value of all fiat currencies.
But hey don't worry, they will soon ''reset'' everything with their new CBDC crap that is already rolling out in NY first phase experiment.
People should tell them FU and reject any tests with this new digital crap.

Doesn't that sound like being the first client of a Ponzi scheme?
Be the first guy that gets that big APY before the company runs out of money since obviously, their whole business model is rotten to the core and nothing like what they are advertising?


Same here, on paper everything was fine, you lend people money with higher interest than what you give to deposits, and you ask for a 150% -200% collateral for which you have enough liquidity in the markets to not have a problem if a dump happens.
But, turned out to be a completely different story and I stopped quite a while ago talking with my friends about crypto when they ask something about investments, I don't know a thing, I didn't hear a thing, I can't say a thing! I never gave advice, I don't plan on doing it!


Let's wait and see where it goes.
If it goes all the way up to the parent company Grayscale, then it's going to be a worse shitshow than FTX.
https://twitter.com/Grayscale/status/1592882143906111488

I did hear this kind of statement from quite a few bankrupt companies, but we might have reached the milestone where we finally have one saying the truth.

But at least some of them were lending out funds within fractions of a percent of what they were giving in yields.
You cant charge 8.5% interest and pay people an 8% yield. That leaves no wiggle room. Heck that .5% in the real world does not even cover operating expenses.

Even at 1% it does not work. 1% of $10 billion dollars is $100 million and that is an astoundingly large amount of money. Until you hire a few hundred people for staff, pay rent, insurance, server & bandwidth hosting, etc... Even just 200 people at $50,000 a year is $10 million. Add in taxes and insurance and you can probably put another $4 to $5 million on top of that.

That math does not work.

It's why banks are now paying 3% or 4% on CDs but lending out money at 7%+ to well over 10%.

That's the way the math works.

-Dave

Optimistic? Nope, at least not for all that DeFi shit that's going down one after another but I am not panicking and full of doom & gloom either (I do expect price to go down a little bit more though). Its just that with everything that has happened in the last six month. bitcoin price ain't that bad at all.

Bitcoin and other alts will be affected from the fomo of closing/shutting down of these crypto related services since it catered not only those alts and tokens but bitcoin as well. But i hope not that much, we are already at $15k's doors so $14k can be a possibility too in the next few weeks.

Another one bites the dust.

Isn't this a bigger deal though? As far as I know Genesis is sort of "partnered" with a good number of significantly-sized crypto platforms.

I don't know where you get your optimism from. This cycle has been the worst ever in terms of returns at the peak of the cycle, and, as we can see now, at the bottom. In no previous cycle the price has fallen for so long below the price peak of the previous cycle.

Apart from the fact that we are at these levels and I don't see any reason for the price to go up significantly. Neither the situation of the economy in general is good, nor the situation of the crypto ecosystem is good either, because everyone is thinking about who is going to go bankrupt next. Money is very skittish, and as soon as it sees problems it runs away.

2 or 3 might be a very conservative prediction. BlockFi and Voyager are about to die, probably sooner rather than later. Well, they should have died a long time ago if not with SBF. But with SBF now hitting the bottom, these two will certainly fall. Except perhaps if somebody else is interested to acquire them. This sister company of Grayscale, Genesis Global Capital, might be the third one. There will surely be others. So there are probably more than 3. They're all definitely very busy right now controlling the damage caused by the fall of FTX to their companies.

$15,000 for Bitcoin is a big possibility. Although all these things that are happening with centralized platforms right now don't have anything to do with Bitcoin, I guess it can't be avoided that it's dragged down as well.

I think that people seriously believed that all that return is simply coming from the profit those platforms make when they lend the money. Few of my friends that had money in Celsius answered me that when i asked how the hell are they making those returns. They really thought of those platforms as banks.

Good point, this is a perfect time to do exit scam and disappear with money.



More lending services will probably go down but I don't expect them to affect bitcoin price significantly, if it affects at all. What could bring it downfew more thousands is if all those rumours about crypto.com being insolvent come true. Even though it doesn't maybe look like that, bitcoin price ain't that bad considering everything that has happened this year.

But on a bright note the Gemini credit card now give 10% back up gas and electric vehicle charging purchases up to the 1st $200 each month.

Back to the serious part of this, did anyone really ever believe those 8%+ returns or were people thinking that I'll get out before it implodes and takes everyone else money with it, but I'll get our on time?

Just about nobody ever does, everybody gets greedy and it all implodes around them. But, I wonder how many people really think that.

Also, as a thought, how many of these implosions are because they can. As in we are solvent and making money, but we can shutdown and run with the funds and get lost in the pile of everyone else doing the same thing.

-Dave

I just talked about it in our local forum. The bad thing about this is that the worst omens come true. Will anyone be surprised if 2 or 3 more fall little by little? The price will easily go to 15 and 12k, hopefully not much more.

If we try to take an optimistic view, this will teach people to guard their own bitcoins, their own private keys but I doubt it if we are talking about most people, and if that was the case, forget about overwhelming price rises for the next cycles, as the mass trading facilitated by the exchanges was largely responsible for the price rises, just as their collapse is now responsible for the price falls.

And the shit show started by FTX is going further:


And this goes further. According to Bitcoin Magazine, Gemini Earn customers are affected by Genesis' problem:



I guess that it's expected that this castle made of cards will make other similar castles collapse....