Investors are worried that liquidity problems for crypto financial-services firm Genesis could spill over to its parent company, Digital Currency Group, and damage the already battered crypto market even further.
, and damage the already battered crypto market even further, after Genesis’s lending arm paused withdrawals last week.
A letter to investors by Silbert on Tuesday, obtained by MarketWatch, partly revealed the interconnectedness between DCG and Genesis. DCG has a liability to Genesis of about $575 million, due in May 2023, Silbert said in the letter. He also mentioned a $1.1 billion promissory note due in 2032, which was the result of DCG assuming Genesis’s liabilities from the default of crypto hedge fund Three Arrows earlier this year.
However, without outside funding, Genesis’s lending unit will likely see increasing withdrawals once the freeze is lifted, and might be facing bigger problems and even be forced into bankruptcy, said Eric Snyder, a bankruptcy attorney at Wilk Auslander.
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