Crypto Exchange Gemini Trying To Recover $900 Million From Crypto Lender Genesis

Crypto broker Genesis and its parent company Digital Currency Group (DCG) owe customers of the Winklevoss twins' crypto exchange Gemini $900 million, the Financial Times reported on Saturday. Reuters reports: Crypto exchange Gemini is trying to recover the funds after Genesis was wrongfooted by last month's failure of Sam Bankman-Fried's FTX crypto group, the newspaper said, citing people familiar with the matter. Venture capital company Digital Currency Group, which owns Genesis Trading and cryptocurrency asset manager Grayscale, owes $575 million to Genesis' crypto lending arm, Digital Currency Chief Executive Barry Silbert told shareholders last month.

Gemini, which runs a crypto lending product in partnership with Genesis, has now formed a creditors' committee to recoup the funds from Genesis and its parent DCG, the report added. Separately, Coindesk on Sunday reported that creditor groups in negotiation with Genesis currently account for $1.8 billion of loans, with that number likely to continue to grow. A second group of Genesis creditors, with loans also amounting to $900 million, is being represented by law firm Proskauer Rose, CoinDesk said citing a source. Further reading: Sam Bankman-Fried Says He Will Testify Before Congress On FTX Collapse

Wrong currency?

[khchung]

Venture capital company Digital Currency Group, which owns Genesis Trading and cryptocurrency asset manager Grayscale, owes $575 million to Genesis' crypto lending arm

Hey, aren't these crypto coins supposed to replace the fiat currencies? Why were they still borrowing and lending in dollars? Shouldn't they have been using one of the crypto coins between them?

Tell us, how many bitcoins/stablecoins/whatever that have been owed!

Re:

[SuperKendall]

Or maybe my ugly monkey picture NFTs will be worth $450 million each and I'll pitch in a NFT or two.

No need to send the whole NFT, just give them the finger!

I can't follow anything in this story

[InterGuru]

And I don't give a damn!

Re:I can't follow anything in this story

[algaeman]

Well, Jimmy, when a cryptobro loves a token very much they want to show just how strong the bond is. So they leverage everything they have, and inject their seed into the token- and through the miracle of Ponzi they give birth to a brand new cryptocoin. And after several generations of this reproduction, and a couple generous Super-PACs, nobody really knows where the source funds have disappeared to, and as long as nobody important is involved, the company can be dissolved and the marks are left holding the bag.

Re:I can't follow anything in this story

[misnohmer]

All I see is another link in the cross dependency chains of the crypto pyramid house of cars is failing. A bunch of people created a bunch of imaginary coins which cost very little to create and almost anyone can create their own coin. Then they traded some of those coins with each other, creating perceived worth - the principle here is along the lines of "I'll trade you 1 billion dollar McDonald's BigMac for 2 McDonald's cheeseburgers worth 500 million each - oh look, we are so rich! Let's see if we can find a sucker to buy the billion dollar BigMac for actual dollars". To help fuel their cause, they kept lending each other the imaginary coins, leveraging them (borrowing against them), etc. In the end, those coins are only worth something if more people are buying than selling. Once most people want to cash out, the pyramid collapses, which is what we are watching today.

That house of cards is taller than we thought!

[Fly Swatter]

And it will get taller. But we will only know that by counting the cards all over the floor.

Billions of nothings exchanging hands

[iAmWaySmarterThanYou]

Why can't they just print up a few zillion more nothing coins to pay their fake debt on their other nothing coins? The whole crypto thing is a big scam anyway so just dive in face first and stop pretending any of it has any real value.

Tulips are worth more than crypto crap coins.

Re: Billions of nothings exchanging hands

[NagrothAgain]

Well they can, and that's what they did to get to this point. But all it does is create the illusion of value, you still need suckers dumping more real money into the "ecosystem" than you have making withdrawls. Otherwise you simply can't conjure up enough real money to cover the cashouts no matter how much you juggle the ponzicoins.

Musical chairs

[tiqui]

With each round of the game, there are fewer chairs and when the music stops some sucker discovers there's no chair for him - he loses.

In the end (in musical chairs) there can be only one. The people playing this game of musical chairs may end up discovering that, as just the latest dressed-up version of a very basic Ponzi scheme, in the end there may be NO chair for the last player. The only winners in a Ponzi game are the earliest participants.

"a foole and his money is soone parted." - Dr. John Bridges,

Re:

[ceoyoyo]

Well, maybe. I thought that last time, after there were bitcoin ETFs and mainstream financial institutions were getting involved, the subsequent crash would have finally dried up the pool of naive investors. But then it all happened again, but bigger.

This time they had Super Bowl ads though. Maybe that's enough reach that next time the crypto bros come knocking people will know better than to give them money?

I can't understand the summary, but don't need to.

[Ed Tice]

Crypto businesses seemed to consist of two types. Many of them aren't business at all. They simply get people to make "deposits" and then steal the money. They had fancy web sites that showed balances and such but anything that got deposited went to funding lifestyles of the crypto-conmen at the top.

The second type were people who genuinely believed in crypto and were trying to run real businesses (whether they had good business plans or not). However, those in the latter group relied on "services" fr

Re: I can't understand the summary, but don't need

[NagrothAgain]

You're missing the other primary use- money laundering. You can create an entire coin and set of exchanges with hundreds or thousands of "users" all ran by you, which gives the illusion of a thriving ecosystem. If you do it carefully you can get a bunch of suckers to start buying in as well, which not only helps shield your laundering activities but provides a bit of extra income when you're ready to execute your "exit strategy."

Gemini vs. Genesis

[gosso920]

The Blunder Twins will soon have a "Revelation" that they're not getting their customers' money back.