The great cryptocurrency crash of 2022 is continuing into 2023. On the heels of the collapse of the FTX exchange, Genesis Global Holdco, a cryptocurrency lender, filed for bankruptcy in mid-January. It becomes the fourth major crypto lender to go bust in recent months. The lending firms attracted business by promising high returns to investors when they deposited their crypto holdings, but the plunge in cryptocurrency prices destroyed their business models.
Genesis had been charged by the Securities and Exchange Commission with offering unregistered securities in a venture with the cryptocurrency exchange Gemini, which is run by the crypto executives Cameron and Tyler Winklevoss. They have accused the parent company of their partner, Digital Currency Group, of failing to return funds that belong to their customers.
The Securities and Exchange Commission is in the process of tightening enforcement of crypto businesses, which are largely unregulated. It has charged FTX founder Sam Bankman-Fried and two of his colleagues with defrauding investors; charged four individuals with running a fraudulent crypto asset pyramid scheme called Forcount Trader Systems that took millions of dollars from Spanishspeaking investors; and charged the creators of the CoinDeal blockchain company with perpetrating a $45 million fraud. Last year, the SEC reached a $100 million settlement with crypto lender BlockFi for failing to register investment products. The company later declared bankruptcy.