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- 75,000 ETH were transferred around the time of bankruptcy filing.
- Major transfers of the past strangely coincide with major events in Genesis.
- Genesis’ plan to pay off creditors must first be approved in Court.
Joining the red list of bankrupt crypto entities is the crypto lending firm Genesis Global Trading, becoming another firm to file for chapter 11 bankruptcy. With ongoing investigation, news came out that an important crypto wallet at Genesis moved a considerable amount of ETH around the time of filing.
A total of 75,000 ETH were transferred to various crypto exchanges on January 19, 2023, with media reporting it as the fifth biggest single-day movement in history when looking closely at almost every major ETH outflow from the wallet correlated with a major event at Genesis, in 2022.
Major transactions at 0xd62 & Coincidences
August 15, 2022, saw 94,595 ETH transferred out by Genesis, and just two days later, ex-CEO, Michale Moro, left the company, and a workforce of 260 people (around 20%) were laid off.
Just two days after the co-head of Sales and Trading at Genesis, Matt Ballenswing, announced the decision to leave the firm, September 30, 2022, saw a transfer of 82,556 ETH. Another 108,974 ETH was transferred on October 25, 2022, many days after Chief Risk Officer Michael Patchen left the company just three months after joining.
When the news of FTX collapsing circulated the market, Genesis transferred 86,220 ETH on November 9, 2022. Two days later, its parent Digital Currency Group (DCG) gave an equity infusion of $140 million. This was the time frame where it halted the withdrawal and new loans to the customers.
What does this movement have to do with Bankruptcy?
After battling the FTX contagion and crypto winter for weeks, the crypto lending firm finally bent its knee and filed for Chapter 11 bankruptcy on January 19, 2023, creating a big question mark on the future of Genesis. A filing typically means a complete halt of all systems, but these transactions indicate that some related entities are still alive.
The over-the-counter (OTC) wallet keeps on transacting on the Ethereum blockchain at the time when the events of bankruptcy are unfolding. From January 21, 2023, the wallet is responsible for sending 24,000 ETH, worth around $39 million, and receiving nearly $92 million in the forms of both USDT and USDC.
What happens at Court?
Genesis Global HoldCo, Genesis Asia Pacific, and Genesis Global Capital filed for bankruptcy. With the hearing going on, all the parties involved in the case should be present or be heard at the hearing. For Example, all the unsecured creditors will require a communication medium to speak via a committee set up by a US trustee operating under the Department of Justice.
Even if Genesis says of having plans to pay off the creditors, these plans must first be considered and discussed by these people, the committee, the equity holders, etc. Moreover, the SEC can call upon anyone for testimony in the case.
What about these transactions?
Many companies establish a legally different entity to shield them from such incidents; it must be considered here that this is how these different entities work together or separately. Although it is considered a safe play to separate the entities, each working under the same umbrella somehow defeats the purpose to a certain extent.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
