2023 promises to be tricky for Bitcoin, new crypto giant just filed for bankruptcy

JVTech News 2023 promises to be tricky for Bitcoin, new crypto giant just filed for bankruptcy

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If the crypto ecosystem thought it had run out of surprises after the unfortunate events of 2022, it wasn’t. Crypto winter looks to be stretching into 2023 with unfortunate news for the sector. Another virtual currency giant has just officially declared bankruptcy.

“Crypto winter” claims an additional victim

As rumors swirled around the cryptocurrency lending platform, Genesis finally filed for bankruptcy last Thursday in Manhattan federal court. After laying off 20% of its staff in August and 30% in October, the company has been unable to stay the course.

Like other companies in the crypto industry, the bursting of the speculative crypto bubble has cost society dearly. Precisely, the situation of the cryptocurrency lender has started to deteriorate since the collapse of the Terra Luna crypto in April 2022. Last November, it was the collapse of FTX that dealt the final blow to the company. , causing him to lose around $175 million (€161 million).

“While we have made significant progress in refining our business plans to address the liquidity issues caused by the recent extraordinary challenges in our industry, including the failure of Three Arrows Capital and the bankruptcy of FTX, a legal restructuring remains as the most efficient way in which we can preserve assets and create the best possible outcome for all Genesis stakeholders,” said Derar Islam, Acting CEO of Genesis.

Despite efforts to restructure, Genesis has formally filed for Chapter 11 bankruptcy protection — hoping for a potential buyout that could wipe out between $1 billion and $10 billion in debt, he says.

Hard blow to Bitcoin and cryptocurrencies

This is another blow to the crypto ecosystem, as Genesis was one of the largest crypto lending companies in the world. The bankruptcy will therefore leave the company’s 100,000 creditors stranded. In particular, it owes $3.5 billion (€3.24 billion) to 50 of them, including crypto platform Gemini, to which it owes $765 million (€707 million).

These new events once again highlight the domino phenomenon of these new crypto giants. Last November, the collapse of the FTX platform led to the bankruptcy of several hundred companies, such as Terra LUNA in April 2022. This repetition is explained by the fact that many companies in the crypto sector are closely connected financially, so when one of them falls, in inevitably causes harm to others.

In addition, this new bankruptcy filing could have wider ramifications for cryptocurrencies, and bitcoin in particular. While it had started to rise again, many fear a further fall in the crypto.

Especially since a threat of selling 600,000 bitcoins looms over the market according to Coindesk. Indeed, the Genesis company was part of the same group as Grayscale, a crypto investment company, currently with a fund of 10 billion dollars (9.25 billion euros) in Bitcoin Trust (GBTC).

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