This Is How Genesis Got Into Trouble 😵‍💫

On the Pod…

​​Genesis May Be Facing Bankruptcy. Could It Take DCG Down With It?

Ram Ahluwalia, CEO and co-founder of crypto-native investment advisor Lumida, and Sam Andrew, crypto author and analyst, talk about the financial situation at Genesis and parent company Digital Currency Group (DCG). The collapse of FTX has dealt crypto lender Genesis another major blow, with the firm halting withdrawals and DCG stepping in to help. Now the two face a range of suboptimal outcomes in the face of massive debts. Ahluwalia and Andrew discuss what could come next, and what should be learned from the recent debacles. Show highlights:

• why Genesis and DCG are so important for the crypto sector

• Ram's explanation of the "Grayscale trade" and why it is relevant to understand the current crisis

• the ghost of Three Arrows Capital and the origins of Genesis' problems

• why Sam thinks Genesis was "reckless" in its loan underwriting

• what a spot Bitcoin ETF would mean for Grayscale's revenue

• what options Genesis and DCG have to weather the storm

• whether it makes sense for Genesis to file for bankruptcy

• why Ram thinks Genesis lending product needs to be shut down

• why Gemini and its Earn program loom large in the Genesis situation

• the risks of enforcement action from regulators

• what the most likely outcome is for Genesis and DCG and whether creditors will be made whole

• whether there will be broader contagion stemming from Genesis and what other crypto companies could be in trouble

• the problems of leverage and why crypto's "shadow banks" need regulation

What’s Poppin’?

Rep. Maxine Waters Says It Is ‘Imperative’ That Former FTX CEO SBF Testifies Next Week

by Samyuktha Sriram

Congresswoman Maxine Waters has said it is imperative that Sam Bankman-Fried attends the House Committee’s hearing next week, saying that his testimony is “critical” to American people.

Sam Bankman-Fried Unsure If Alameda Had ‘Special Access’ to FTX

by Samyuktha Sriram

Former FTX CEO Sam Bankman-Fried said that his quantitative trading firm Alameda Research may have had a delayed liquidation account with FTX.

USDC Issuer Circle and Concord Terminate Planned Multibillion SPAC Merger

by Samyuktha Sriram

Circle and Concord announced the “mutual termination” of their hotly anticipated $9 billion SPAC merger to take the USDC issuer public.

Large Defi Lender Maple Finance Cuts Ties With Insolvent Client That Was Exposed to FTX

by Samyuktha Sriram

Maple Finance has cut all ties with its parent entity Orthogonal Trading after the latter allegedly “misrepresented its financial position.”

Bitcoin Profits Dwarfed By Immense, Historic Losses, New Report Shows

by Samyuktha Sriram

Glassnode analysts found that a decline in the Bitcoin Realized Cap metric was a sign of increased capital flight from the network since May 2021.

In Other News…✍️✍️✍️

• Silvergate CEO Alan Lane took pains to reassure investors that the bank’s assets were safe as Morgan Stanley downgraded the crypto bank’s rating after its exposure to FTX. 

• Following the collapse of FTX, Goldman Sachs plans to invest “tens of millions” in crypto firms.

• Securities and Exchange Commission Chair Gary Gensler will brief Democrats of the House Financial Services Committee before FTX’s hearing next week.

• The UK government is expected to announce new regulation on crypto assets.

• Bankrupt crypto lender Celsius received court approval to delay its submission of a chapter 11 reorganization plan to Feb. 15.

• Tokens minted by decentralized exchange aggregator 1inch (disclosure: a former sponsor), worth north of $111 million at time of writing, have completed their “vesting” period and will be unlocked this month. 

• Rumors are spreading about the launch of a potential ‘Twitter Coin’.

• The U.S. Federal Trade Commission is investigating crypto companies for deceptive advertising practices.

• Crypto lender Nexo (disclosure: a former sponsor) announced that it will gradually phase out U.S. products and services over the coming months after hitting a ‘dead end’ with regulators.

• Swyftx, an Australian crypto exchange, fired 90 employees, but said it had no direct exposure to FTX.

Today in Crypto Adoption...

• Crypto.com (disclosure: a sponsor of Unchained) partnered with Coca Cola to launch a series of NFTs, leading to a surge in its CRO token.

The $$$ Corner…

• Aave Companies, the entity behind DeFi protocol Aave, acquired metaverse developer Sonar.

• Panoptic, a DeFi protocol for trading perpetual options, closed a $4.5 million seed funding round.

What Do You Meme

📈 Your Market Update 📉

• BTC is down 1.5%, trading at $16,981

• ETH is down 2.41%, trading at $1,256

• BTC dominance: 36.94%

• Crypto market cap: $884 billion

*All data as of today, 5 am ET

Recommended Reads

1. Vitalik Buterin on what excites him about the Ethereum application ecosystem:

2. CoinLedger on how to reduce your taxes by selling NFTs:

3. Scoopy on Ethereum and Cosmos: 

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