(Natural News) Genesis Trading has reduced its workforce by 30 percent as it confronts increasing pressure from creditors and the impending threat of bankruptcy, a person with knowledge of the issue reported.
The crypto lending arm of Barry Silbert’s Digital Currency Group (DCG) had already dismissed 20 percent of its labor force aside from replacing its CEO last year.
Silbert’s crypto conglomerate, which includes the Grayscale Bitcoin Trust (GBTC) and mining company Foundry, was struck by last year’s market turmoil and the bankruptcy of crypto hedge fund Three Arrows Capital.
The source, who requested anonymity because the numbers are confidential, said about 60 positions were removed.
The company now has around 145 employees, and the current reduction comes a day after interim CEO Derar Islim told clients that Genesis requires more time to resolve its financial woes. The cuts were previously reported by the Wall Street Journal.
Genesis hired bankruptcy professionals immediately after the crash of crypto exchange FTX and its sister hedge fund Alameda Research.
Genesis requested an emergency loan of $1 billion after the collapse of Alameda
The Wall Street Journal reported that Genesis had requested an emergency loan of $1 billion shortly after the collapse of Alameda, which was a major Genesis client.
Genesis froze all its client redemptions after FTX filed for bankruptcy protection on November 11. (Related: Crypto lender BlockFi blocks withdrawals as FTX declares bankruptcy.)
Silbert drew criticisms following the redemption freeze.
Cameron Winklevoss, a Genesis client and CEO of crypto exchange Gemini, accused Silbert of engaging in “bad faith” stalling tactics and demanded an explanation for the liquidity crisis at Genesis in the past week. He added DCG owes $1.675 billion to Gemini customers and other Genesis creditors.
Silbert tweeted that DCG never borrowed $1.675 billion from Genesis and “is current on all loans outstanding.”
“As we continue to navigate unprecedented industry challenges, Genesis has made the difficult decision to reduce our headcount globally. These measures are part of our ongoing efforts to move our business forward,” a Genesis spokesperson said in an email to MarketWatch.
Genesis hired investment bank Moelis & Co. to look into possible options after suffering losses due to the crash and bankruptcy of FTX in November. The company also lost its involvement with Three Arrows Capital, which filed for bankruptcy last year.
Genesis is the latest company in the crypto sector to struggle for survival as the industry stays unregulated.
The company hopes to refine its business plan for Genesis’ client offerings, which includes “reducing costs and driving efficiencies in all our business lines,” said Islim in a letter to clients on January 4.
Genesis earlier informed its customers that its withdrawal freeze is likely to last “additional weeks” amid attempts to avoid a possible bankruptcy filing.
“At this point, we anticipate that it will take additional weeks rather than days for us to arrive at a path forward,” Islim said. “Genesis is working in consultation with highly experienced advisors and evaluating the most effective path to preserve client assets, strengthen our liquidity, and ultimately move our business forward.”
Genesis first signaled exposure to FTX in a Nov. 10 Twitter thread, disclosing that it had $175 million in funds on the crypto exchange. In November, the company denied plans to file for bankruptcy “imminently” after failing to cover a reported $1 billion deficit in its balance sheet.
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