A couple of Virginia public pension funds had suffered from the failure of crypto lender Genesis.
Failure of Crypto Lender Genesis.
- The top 50 creditors of Genesis are owed around $3.5 billion, and at least one of them is connected to the $6.8 billion Virginia Pension System.
- In Fairfax County, Virginia, two pension funds contributed $35 million to Genesis Crypto Lender.
- Genesis declared bankruptcy last week after learning about FTX and Three Arrows Capital, two unsuccessful businesses.
Digital Currency Group (DCG subsidiary)’s cryptocurrency financing, Genesis Global Capital, filed for Chapter 11 bankruptcy protection on Thursday. Two public pension funds in Fairfax County, Virginia, are among the companies with exposure to the struggling lender.
According to the bankruptcy petition, Genesis estimated more than 100,000 creditors and asserted obligations totaling $5.1 billion. The company owes its top 50 debtors a total of around $3.5 billion, one of whom is connected to Virginia’s nearly $7 billion pension fund system.
The joint pension fund investment in VanEck Fund, which is listed as a Genesis creditor, was $35 million. Investors in VanEck’s New Finance Income Fund included Fairfax County Employees’ Retirement System and Fairfax County Police Officers’ Retirement System Investment Managers. A $53 million claim was made against Genesis.
The VanEck Fund “seeks to create income opportunities for investors through a simpler approach to short-term lending arrangements with digital asset businesses,” according to a press statement announcing the retirement system’s investment in the fund. Last year, it was created.
Genesis’ financial problems were caused by its exposure to the defunct cryptocurrency fund Three Arrows Capital after that company’s failure to fully recoup its $2.3 billion debt from the previous year. Genesis owned $175 million in FTX, the defunct cryptocurrency exchange founded by Sam Bankman-Fried. Genesis’ parent company, DCG, has also reduced expenses by freezing dividend payments.
Jack Tan, the co-founder of cryptocurrency trading platform WOO Network, told Insider “Unfortunately, Genesis’ difficulty illustrates that the infection from FTX is not gone, and it could further hinder adoption and trust from institutions.”
Implications for Crypto Lender from Lessons Learned
- In light of the Genesis failure, investigate the regulatory concerns of crypto lending.
- Discuss the significance of due diligence and risk assessment in cryptocurrency investing.
- In the expanding crypto lender business, emphasize the importance of adequate risk management and transparency.
- Provide information about the present state of the Bitcoin market.
- Discuss risk-mitigation measures for cryptocurrency investing.
- Investigate potential partnership and innovation opportunities in the cryptocurrency lending business.
Conclusion:
The failure of Genesis had a profound impact on a couple of Virginia’s public pension funds, serving as a stark reminder of the risks and challenges associated with cryptocurrency investments. As the world of crypto lenders continues to evolve, it becomes increasingly crucial for investors and regulators alike to learn from such incidents and adapt their strategies accordingly. Ultimately, a cautious and informed approach is essential to navigate the complex cryptocurrency landscape and ensure the long-term financial stability of public pension funds.
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A US-based news outlet called Business Insider carried the topic “A couple of public pension funds in Virginia have exposure to the collapse of crypto lender Genesis” 4 days ago.
