Genesis Global

Genesis Global's January 2023 bankruptcy revealed that the crypto industry's contagion from 2022 was still claiming victims. The lending platform, owned by Digital Currency Group, had $3.5 billion in claims from customers who had deposited crypto expecting returns. Genesis's exposure to Three Arrows Capital and FTX left it unable to meet withdrawal demands. The mechanism failure was interconnected exposure without insulation. Genesis was connected to multiple failed entities through the crypto lending daisy chain. When 3AC defaulted, Genesis was exposed. When FTX collapsed, Genesis was exposed there too. The company had concentrated counterparty risk across multiple entities that all failed in the same crash—diversification that wasn't actually diversified because all counterparties were correlated to the same market risk. Genesis's parent company, Digital Currency Group (also owner of Grayscale), was also weakened by the subsidiary's failure. The bankruptcy demonstrated how crypto conglomerates had created systemic risk within single corporate families—exposure to one part of the crypto ecosystem meant exposure to all of it.