Coinbase has found a way to make money on the bankruptcy of Genesis and BlockFi
Date: 2023-09-06 Author: Karina Ziganova Categories: BUSINESS
The popular crypto exchange Coinbase has found a way to capitalize on the withdrawal of crypto lenders Genesis and BlockFi from the market. The trading platform launches its own crypto-lending service. Information about its launch appeared on the website of the US Securities and Exchange Commission (SEC)
Cryptolending service Coinbase will be aimed at institutional investors. The SEC documents say that the crypto exchange has already raised $57 million for the new project. The service will be focused on investors from the United States.
As part of the new lending program, Coinbase users will be able to lend assets to the trading platform so that the crypto exchange uses them to lend to institutional clients.
Similar services were offered by Genesis and BlockFi. For both companies, the business ended with filing for bankruptcy. BlockFi's problems began at the end of 2022, amid the collapse of the large crypto exchange FTX, which was a key investor in the crypto lender. On November 28, 2022, the company filed for bankruptcy.
Genesis is a crypto lender controlled by the Digital Currency Group (DCG). Its founder was Barry Silbert, a popular businessman in the crypto community. DCG also includes the largest investment crypto fund Grayscale. As of the time of writing, his bitcoin trust holds over 3% of the total BTC supply. For comparison, under the control of MicroStrategy - the largest investor in bitcoin among public companies - only 0.728% of the total supply of cryptocurrency.
The problems of Genesis, which turned Silbert into conflict with the founders of the Gemini exchange, the Winklevoss Brothers, also have their roots in the collapse of FTX. In November 2022, the crypto lender stopped returning money to customers. At the end of January 2023, the company filed for bankruptcy. The financial hole Genesis, according to media reports, forced DCG to consider selling assets from its portfolio. In particular, members of the crypto community were frightened by the possible sale of bitcoins, which are controlled by Grayscale.
In June 2023, the SEC sued Coinbase. The regulator charges the crypto exchange with an illegal offer of unregistered securities. Amid a conflict with the SEC, in July 2023, Coinbase began winding down its staking program.
