Genesis Trading, a troubled crypto lending company, has laid off 60 more employees, or 30% of its workforce, according to sources. This marks the company’s second round of layoffs, after previously cutting approximately 20% of its staff, including replacing its CEO.
The Digital Currency Group’s lending arm has been under pressure from creditors and facing potential bankruptcy. The company currently has 145 employees but may face further layoffs as it seeks new liquidity. Genesis Trading attributes its difficulties to large exposure to the troubled FTX and Alameda.
“As we continue to navigate unprecedented industry challenges, Genesis has made the difficult decision to reduce our headcount globally,” the spokesperson said in a statement. “These measures are part of our ongoing efforts to move our business forward.”
The continued layoffs may be an indicator of a looming bankruptcy case to help the company restructure its core business.
Genesis Trading Faces Imminent Bankruptcy
The crypto lending firm has a huge imbalance in its balance sheet amounting to billions. According to recent revelations by crypto exchange Gemini co-founder Cameron Winklevoss, more than $900 million belonging to over 340k Earn users is stuck with Barry Silbert and Digital Currency Group. However, Silbert vehemently denied the accusations, which further complicates the entire case.
“DCG did not borrow $1.675 billion from Genesis. DCG has never missed an interest payment to Genesis and is current on all loans outstanding; the next loan maturity is May 2023. DCG delivered to Genesis and your advisors a proposal on December 29th and has not received any response,” Silbert noted.
The nasty accusations have led to analysts warning regulators may ban cryptos from operations. Furthermore, billions of dollars belonging to individual investors have been wiped out in less than twelve months.
The open letter from Cameron has warned Silbert that Genesis and DCG have until January 8 to solve the problem amicably before facing legal action. As such, Genesis is likely to file for bankruptcy protection, which could mean more capitulation in the crypto market.
Furthermore, last year’s losses sustained from Three Arrows Capital (3AC) have now worsened by the Alameda and FTX implosion.
Genesis Trading’s other businesses, including spot and derivatives markets, have bolstered its balance sheet in the past few quarters. Nonetheless, the decreased cryptocurrency trading volume has threatened its core business of loaning fiat against digital assets.