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Genesis Digital received $1.15 billion investment from Alameda Research

Genesis Digital

TL;DR Breakdown

  • Crypto mining company Genesis Digital Assets was the biggest venture investment made by Alameda Research
  • Crypto lender Genesis and its parent company Digital Currency Group (DCG) allegedly owe $900 million to Gemini’s clients

Genesis Digital Assets received the largest venture investment from Alameda Research, FTX’s sibling company and the organization at the root of the exchange’s bankruptcy. According to documents made available to the public by Bloomberg on December 3, Genesis Digital raised $1.15 billion from Alameda in less than nine months.

Before the decline in cryptocurrency values, a cash injection was made between August 2021 and April of this year. Genesis Capital, the trading firm with $175 million in funds locked up in an FTX trading account, is unrelated to Genesis Digital, the largest Bitcoin mining operation in the United States.

Former FTX CEO, Sam Bankman-Fried, recently admitted to participating in Alameda’s venture decisions, including the Genesis Digital investment, after initially denying it to regulators. According to the documents, Alameda deployed capital in four stages: $100 million in August 2021, $550 million in January, $250 million in February, and $250 million in April 2022.

Genesis Digital raises millions to fuel its growth

Genesis Digital raised $556 million in two funding rounds last year to fuel its aggressive growth plans. Some of the funds were acquired to buy 20,000 Bitcoin miners from Canaan, build a new data center in Texas, and expand its operations in the United States and Northern Europe.

Rising energy costs and the bear market have squeezed the mining industry’s profit margins. The latest Hashrate Index Q3 mining report highlighted several factors that have resulted in a significantly lower hash price and higher cost to produce 1 BTC. Due to poor market performance and increased computational demand, Bitcoin miners’ revenue fell to a two-year low of $11.67 million.

The recent FTX crisis will prolong the crypto winter by eroding investor confidence. According to a Coinbase report, stablecoin dominance has reached a new high of 18%, implying that the liquidity crisis could last until the end of 2023.

Genesis allegedly owes $900 million to Gemini’s clients

According to a Financial Times published on December 3 citing sources familiar with the situation, cryptocurrency lender Genesis and its parent company Digital Currency Group (DCG) purportedly owe $900 million to Gemini’s consumers.

With the help of Genesis, the cryptocurrency exchange Gemini offers investors the chance to earn 8% interest by lending out their cryptocurrency, including Bitcoin and stablecoins backed by fiat money. Gemini Earn is a product that Gemini Earn runs in collaboration with Genesis.

Days after revealing that almost $175 million in money got trapped in an FTX trading account, Genesis said on November 16 that withdrawals had been temporarily banned due to “extraordinary market turbulence.” Genesis denied rumors that it was “imminently” going bankrupt despite reportedly having trouble raising capital for its loan division.

According to the exchange status page, problems with deposits first appeared at Gemini Earn on November 16. While all other Gemini services, such as the exchange trading engine and the Gemini Credit Card, are still operational as of this writing, the product is still unavailable.

Kelda Kageni

Kelda Kageni

As a writer with a strong background in both cryptocurrency and blockchain technology, Kelda has a unique understanding of these rapidly evolving crypto industries. Writing for both technical and non-technical audiences, she contributes informative and engaging content for websites, whitepapers, and thought leadership pieces. Her current passions are observing industry news and developments and consistently producing timely, relevant content.

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