The Crypto Lender Genesis Just Said Goodbye To Its High-Risk Lifestyle
Just as everyone is settling into the new normal of lockdowns and social distancing, we bring you news of a very, very serious nature: the crypto lender Genesis just filed for Chapter 11 bankruptcy.
The filing comes as the ongoing crisis in the crypto lending industry continues to deepen. Over the past few weeks, there has been a growing concern that many crypto lenders have overextended themselves in an attempt to capitalize on the bullish sentiment of late 2018 and early 2019.
What Exactly Is Genesis?
Genesis was a crypto lender that specialized in administering loans to people who had money invested in digital assets, such as Bitcoin and Ethereum.
The company was founded in 2016 and secured more than $50 million in venture capital funding over the course of three rounds. The company also raised more than $1 billion in debt financing from a group of lenders.
What Caused Genesis To File For Bankruptcy?
The filing of Chapter 11 bankruptcy protection by the firm comes after months of heavy losses in the business. The losses were caused by a series of factors, including:
- Regulatory Issues: There have been increasing regulatory issues surrounding the crypto lending industry, making it difficult for some lenders to stay afloat.
- Bubble Concerns: Some experts believe that the crypto lending industry is in the midst of a bubble that is bound to burst.
- High Interest Rates: The interest rates on some crypto loans are as high as 50%! This makes it increasingly difficult to repay the loans, leading to defaults and losses for lenders.
What Does This Mean for Other Crypto Lenders?
The filing of Chapter 11 bankruptcy protection by Genesis could spell disaster for other crypto lenders, as well. It is clear that the industry is in a precarious position and that investors are becoming wary of extending loans to these firms.
It remains to be seen which firms will be able to survive this situation and emerge from these dark times with their heads held high. Until then, we can expect more news of bankruptcy filings as the crisis continues to spiral out of control.
The Moral of the Story?
So, what can we learn from the Genesis filing? I think it’s clear: high-risk lifestyles don’t pay off–at least not in the end! It’s always best to be safe and play it conservative (in life and in investing).
But hey, who am I to judge? Live your life, follow your dreams and don’t let anyone tell you what to do–just keep in mind that sometimes, even the boldest moves end in bankruptcy.
