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A Recent Round of Layoffs at Gemini, A Cryptocurrency Exchange, Involved 10% Of the Staff

A representative for the cryptocurrency exchange Gemini informed CNBC on Monday that they would be laying off 10% of their staff. For Gemini, which was co-founded by Cameron and Tyler Winklevoss and is subject to New York banking regulation, unlike many of its competitors, this is at least the third round of layoffs in less than a year.

 

According to PitchBook data, Gemini had 1,000 employees as of November 2022, thus, a reduction of about 100 jobs seems likely. TechCrunch stated in July 2022 that Gemini had reduced its workforce by 7%, following a 10% reduction in June 2022.

 

In recent weeks, Gemini has fought to protect its customers’ money. Since the cooperation with Barry Silbert’s insolvent company Genesis, the exchange has also been involved in a legal battle with the Securities and Exchange Commission over an alleged unregistered offering and sale of securities.

 

Gemini’s high-yield loan product, Gemini Earn, has gotten the company into a heated spat with Silbert’s Genesis Trading. This cryptocurrency lending service has made a killing for Gemini customers.

 

As a result of FTX’s bankruptcy filing, ties between the two companies deteriorated. Shortly afterward, Genesis suspended loans and redemptions, leaving Gemini customers short an estimated $900 million. The failed cascade also resulted in the temporary suspension of the Gemini Earn product.

 

Gemini’s 340,000 clients have become more dissatisfied in the months following the discontinuation of the Earn product. Many have joined forces to file a class lawsuit against the stock market.

 

On January 19th, Genesis began the process of declaring bankruptcy. There is a list of the 50 largest unsecured creditors in the filing, and Gemini comes in at number one with a claim of $765.9 million. This is more than $300 million higher than the subsequent highest creditor.

 

Since Sam Bankman-cryptocurrency Fried’s exchange FTX filed for bankruptcy on November 11, several crypto firms, including Crypto.com, Coinbase, Kraken, and Genesis, have slashed employment. For the second time in as many months, Coinbase reduced its personnel by 20% at the beginning of January. The move was made to conserve funds during the bear market in cryptocurrencies.

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DOJ Is Investigating Crypto Conglomerate DCG, Report

According to the Bloomberg story, the investigations, which are in the early stages, are concentrated on money transfers between DCG and its Genesis division.

 

According to Bloomberg late Friday, investigators from the U.S. Securities and Exchange Commission and the Eastern District of New York (EDNY) of the U.S. Department of Justice are looking into transfers between Digital Currency Group and the conglomerate’s Genesis subsidiary.

 

According to the article, the DOJ’s Eastern District of New York investigators has thus far asked DCG and Genesis for interviews and papers. At the same time, the SEC’s investigation looks to be in a similarly early stage. According to the report, which relied on sources with knowledge of the situation, neither Genesis nor DCG, which also serves as the parent company of CoinDesk, have “been accused of misconduct” as of yet.

 

According to the source, the inquiries focus on the financial interactions between Genesis and DCG.

 

Due to loans made to the now-imploded hedge fund Three Arrows Capital, CoinDesk revealed in late June that Genesis Trading suffered significant losses and filed a claim for $1.2 billion. DCG took on the Genesis claim.

 

Requests for comment from Genesis and DCG spokespeople were delayed. A Genesis representative informed the news source that the company “maintains regular interaction” with authorities but could not comment on any specific issues. At the same time, a DCG spokesperson said that the company was unaware of any EDNY probe.

 

Genesis said in November that its lending division would halt withdrawals, which impacted businesses like Gemini, which depended on Genesis for its Earn platform. Barry Silbert, the creator of DCG, and Cameron Winklevoss, the co-founder of Gemini, have recently started a public spat about problems related to this suspension.

 

 

 

 

 

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Genesis Lays Off 30 Percent More of Its Staff

The company announced it would be “cutting costs and driving efficiencies” amid a problematic environment for cryptocurrency companies the day before it announced the job cuts.

 

More staff were let go by Genesis Global Trading on Thursday, a representative for the cryptocurrency trading company revealed in a statement to CoinDesk.

 

According to someone who knows the situation, Genesis reduced their workforce by around 30% to 145 personnel. In August, Genesis laid off 20% of its 260 employees.

 

The source said that the sales and business development divisions had been particularly badly affected.

 

Genesis has made the difficult choice to cut our headcount globally, a representative for the company said in a statement. “As we continue to face unprecedented industry headwinds,” the spokesperson added.” These actions are a part of our ongoing initiatives to advance our business. We value the efforts of our bright and committed team as we search for a long-term solution that will benefit Genesis’s operations, customers, and staff.

After the business informed its clients on Wednesday that it would be “cutting expenses and driving efficiencies” in light of the problematic environment facing crypto companies, the company announced the layoffs on Thursday.

 

The global market collapse brought on by Sam Bankman-FTX Fried’s exchange failure has hurt Genesis, a subsidiary of crypto giant Digital Currency Group (which is also the parent company of CoinDesk). Genesis disclosed that its derivatives division had $175 million in money that could not be withdrawn in November. Later, the company said its lending division would stop allowing its clients to withdraw money.

 

After filing a $1.2 billion claim against the defunct cryptocurrency hedge fund Three Arrows Capital, the company made layoffs in August.

 

 

 

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Genesis-DCG Load Results In Class Action Arbitration Case From Gemini Customers

In a filing, claimants assert that Genesis broke the terms of its master agreement by concealing its insolvency from lenders like Gemini and going bankrupt in the summer of 2022.

 

In reaction to Genesis Global Capital and Digital Currency Group restricting withdrawals and Gemini stopping its Earn redemption scheme, three Gemini Earn users have requested class action arbitration against them.

 

A class-action lawsuit is frequently viewed as an alternative to class-action arbitration, a mechanism for resolving disputes between parties by a neutral third-party arbitrator. The arbitration process is often informal and voluntary. However, the arbitrator’s final ruling cannot be challenged, so that it may go more quickly and cheaply than a class-action lawsuit.

 

DCG is also a parent firm of CoinDesk.

 

According to the plaintiffs, Genesis neglected to surrender their digital assets and those of all other Gemini Earn members as mandated by the Master Agreements between the company and users.

 

They contend that Genesis first violated the Master Agreement when the company went bankrupt in the summer of 2022 but failed to notify its clients of the situation.

 

Then, they claim, Genesis entered into a phony transaction with its parent company, DCG, to conceal the insolvency, exchanging the right to recover a $2.3 billion debt owed to Genesis by the now-insolvent hedge fund Three Arrows Capital for a promissory note with a due date of 2033 for a note with a $1.1 billion principal.

 

The group also claims that Master Agreement of Genesis is making unregistered securities sales and are looking to withdraw the contracts of sales and damages.

 

There is also a parallel class action suit registered against Gemini at the end of Dec by investors Brendan Picha and Max Hastings, which alleges the exchange was involved in the unregistered securities sales through its Earn program.

 

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After FTX’s Demise, Cryptocurrency Lender Genesis Denies Plans to File For Bankruptcy

After stopping withdrawals days ago in response to the failure of cryptocurrency exchange FTX, cryptocurrency lender Genesis has denied that it is on the verge of filing for bankruptcy.

 

On Monday, Genesis declared that it has “no plans” to declare bankruptcy anytime soon and will instead try to reach a “consensual” agreement.

 

In an email reply to Al Jazeera, a spokeswoman said, “We have no plans to file bankruptcy imminently.” “Our objective is to reach a mutually agreeable resolution to the current situation without declaring bankruptcy. Genesis keeps in touch with its creditors in a positive way.

 

According to a previous story by Bloomberg News, Genesis, which has offices in New York City, London, and Singapore, was having trouble finding new money for its lending section and had warned investors it would declare bankruptcy if it did not.

 

The crypto investment bank reportedly spent the previous few days trying to raise at least $1bn in new capital, according to the report, which cited people with knowledge of the situation.

 

The Wall Street Journal reported on Monday, citing persons familiar with the situation that Binance had been approached by Genesis to invest, but had declined to owe to potential conflicts of interest.

 

According to the Wall Street Journal article, Genesis also contacted the private equity company Apollo Global Management for financial assistance.

 

Binance chose not to respond. Apollo has been contacted by Al Jazeera for comment.

 

One of the biggest cryptocurrency lenders, Genesis Global Capital, this week put a halt to customer withdrawals because of what it claimed was a liquidity deficit brought on by an increase in withdrawal requests following Sam Bankman-collapse.

 

The third-largest cryptocurrency exchange, FTX, collapsed earlier this month, shocking the industry and drawing analogies to the 2008 collapse of Lehman Brothers as well as accusations of fraud and poor management.

 

Sam Bankman-Fried, the founder of FTX who left his position as CEO earlier this month, spoke with Vox last week and appeared to retract some of his comments. He expressed regret for his decision to file for bankruptcy protection and accused regulators of failing to protect consumers.

 

Investors are currently suing Bankman-Fried and other celebrities who pushed FTX for $11 billion.

 

According to reports, the US Department of Justice and the Securities and Exchange Commission are also looking into possible securities law violations by Bankman-Fried or his business.