Jakub Porzycki/Getty Image
- Genesis owes its top 50 creditors around $3.5 billion, with at least one creditor tied to a $6.8 billion Virginia pension system.
- Two pension funds in Fairfax County, Virginia, invested $35 million in a Genesis creditor.
- Genesis filed for bankruptcy last week amid exposure to failed firms FTX and Three Arrows Capital.
Genesis Global Capital, the crypto lending unit owned by Digital Currency Group (DCG),filed for Chapter 11 bankruptcy protection on Thursday. Among the firm’s exposed to the embattled lender are two public pension funds in Fairfax County, Virginia.
Genesis estimated more than 100,000 creditors and claimed $5.1 billion in liabilities, according to bankruptcy filings. The firm owes its top 50 creditors around $3.5 billion, with one of the creditors having ties to a nearly $7 billion pension fund system in Virginia.
The pair of pension funds invested $35 million in a VanEck fund, which is listed as a Genesis creditor. The Fairfax County Employees’ Retirement System and the Fairfax County Police Officers Retirement System were investors in the New Finance Income Fund from investment manager VanEck. There was a $53 million claim against Genesis.
“The fund is designed to seek income opportunities for investors via short-term lending arrangements with digital assets entities through a simplified approach that alleviates the operational burden of direct digital assets lending,” per a press release announcing the retirement system’s investment in the VanEck fund last year. “This may also result in potentially lower volatility as compared to direct digital assets exposure.”
Genesis’ financial woes stem from its exposure to defunct crypto fund Three Arrows Capital after the investment firm couldn’t pay back all of a $2.3 billion loan last year. Genesis had $175 million locked up in Sam Bankman-Fried’s fallen crypto exchange FTX. DCG, the parent company of Genesis, has cut costs by halting its dividend payments as well.
“Unfortunately, Genesis’ struggle shows that the contagion from FTX is not over, and this may further slow down the adoption and trust from institutions,” Jack Tan, cofounder of crypto trading platform WOO Network, told Insider.
Genesis’ first-day hearing in its bankruptcy case is scheduled for 2 p.m. ET on Monday.