Genesis parent company DCG loses $1 billion the same amount the crypto-friendly bank Silvergate loses
It cannot be denied that 2022 had been a year of many ups and downs, a year in which several crypto projects are going through a tough environment due to the collapse of TerraUSD and FTX crypto exchanges.
Starting with the collapse of TerraUSD, the third largest Stablecoin by value, which affected many crypto projects earlier last year, to the collapse of FTX's bankruptcy in November. Any project exposed to one of them suffers heavy losses and many went bankrupt. The exposure now becomes a chain exposure, which means that an exposure that affects one another.
Cryptocurrency lender Genesis suffered losses and mismanagement caused by its parent company Digital Currency Group (DCG) and filed for bankruptcy. DCG exposure also stems from the collapse of Three Arrows Capital (3AC) in 2022.
3AC went bankrupt during the hard time of the bear market, causing DCG to lose more than 1 billion. How is it that an exposure to only 3AC DCG caused such huge losses, I don't think 3AC alone was the cause of the losses.
But according to last year's fourth-quarter DCG report, the company has $5 billion in assets, a $24 million loss last quarter and total year revenue of $718 million. Still, I can't figure out where the $1 billion losses are coming from since the valuation is $2.2 billion and $27.93 million per share before it falls later.
From look of things, Genesis, DCG's lending arm, was 3AC's largest creditor, lending 3AC's hedge fund about $2.3 billion before the company filed for bankruptcy in July 2022.
I don't know if the collapse of 3AC and Genesis alone is the one that caused the big losses on DCG, what about the exposure to the bankruptcy of FTX and Silvergate. DCG, Genesis' parent company, support Silvergate's crypto-friendly banking program with more than $119 million, and also had assets locked in FTX.
All the losses caused by DCG also made it arm Genesis suffer more and also passed it on to Gemini, a Winklevoss brother with earning program. The firm owe Gemini and user Earn program $900 million in Genesis vault when it halt withdrawal. Genesis also owes its creditors more than $3 billion.
However, the collapse of 3AC and Genesis caused DCG's valuation to drop significantly and had a major financial impact on DCG's financial fallout.
Other crypto firms that get exposure to FTX bankruptcy
BLOCKFI The crypto lender filed for bankruptcy Nov. 28 after the FTX collapse claimed it have a deal worth $240 million with FTX
COINBASE Coinbase Global Inc have a deposit that worth $15 million on FTX despite not been exposed to the crypto exchanges and its sister Alameda Research.
CELSIUS NETWORK The crypto lender Celsius get exposure through a token called Serum and it had $3.4 million Serum tokens (SRM) on FTX before the crypto exchanges went bankrupt, Celsius also have $13 million loan on FTX research company Alameda.
COINSHARES CoinShares get exposure of $30 million of FTT, FTX native token.
CRYPTO.COM The Singapore-based crypto exchange narrowly withdraw over $1 billion before FTX collapse but get exposure with just $10 million at time FTX collapse
VOYAGER DIGITAL The crypto lender go through a tough environment during the bear caused by TerraUSD, it then set a deal to sell it asset in Sept to FTX $1.4 billion and have over $3 million balance that get exposure to FTX's collapse.
GALAXY DIGITAL The crypto financial services company had assets worth $76.8 million on FTX, at the time the bankruptcy exchange halt customers withdrawal in November 5.
GALOIS CAPITAL Galois Capital hedge fund had amount of $100 million which is almost half of its assets on FTX with addition crypto assets worth $45 million.
The exposure to bankrupt company is just likes chain that affect not only the firm that get exposed to it,but affect others that are related to them.
Thanks for your attention
Posted Using LeoFinance Beta
