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Genesis Halts Crypto Derivatives Amidst Broader Strategic Changes and Legal Disputes

Genesis, a leading digital asset financial firm, has decided to cease crypto derivatives trading via its subsidiary, GGC International (GGCI). This decision, communicated to clients on Wednesday, encompasses all business entities and is rooted in strategic business considerations.

The company has emphasized that all open derivatives positions with GGCI will remain valid until expiry. This move aligns with Genesis’s recent strategic shifts and its intent to concentrate on its primary areas of expertise. The firm has been actively assisting clients in managing and concluding any outstanding open positions, with the official termination of derivatives trading services slated for September 21.

While the exact reasons for this decision remain undisclosed, market analysts speculate potential factors. These include regulatory uncertainties, market fluctuations, or evolving client requirements, possibly influencing Genesis’s strategic redirection.

In a separate development, as reported by Reuters, Genesis Global Capital is embroiled in a lawsuit against the Digital Currency Group (DCG). The contention revolves around the repayment of loans exceeding $610 million that matured in May. Genesis seeks to recover $500 million from DCG, borrowed under four distinct loans. A separate claim has been filed to retrieve 4,550 Bitcoin, approximately valued at $117 million, owed by the affiliated Digital Currency Group International under another loan.

Genesis asserts that reclaiming these unpaid amounts would substantially benefit its bankruptcy estate. However, they allege that DCG wrongfully holds these funds. Genesis has hinted at ongoing discussions with DCG regarding partial repayment despite the legal proceedings. They have expressed willingness to retract the lawsuits if both parties settle.

Court records reveal DCG’s outstanding debt of over $1.7 billion to Genesis and other creditors. On August 29, a tentative agreement was announced. Under this, DCG would remit $275 million and secure $1.16 billion in new credit facilities with maturities spanning two to seven years.

Responding to the lawsuit, DCG anticipates presenting a settlement to the bankruptcy court shortly. Their goal is to commence fund distribution to creditors, marking a significant step towards recovery for the company’s creditors.

Founded by Barry Silbert in 2013, the company declared Chapter 11 bankruptcy in January after suspending withdrawals. This bankruptcy ensued after Genesis granted substantial loans to hedge funds Three Arrows Capital and Alameda Research. Notably, both these hedge funds also declared bankruptcy in 2022.


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