Key Points:
- People familiar with the matter revealed that Genesis CEOs have low-priced pre-purchase privileges for the cryptocurrency supported by the FTX exchange.
- As revealed, there are two tokens, FTT and Serum, before they are released to the public.
- The FTT and Serum tokens, as well as Solana, are also accepted by Genesis as collateral for the Alameda mortgage to secure its loans.
As reported by the Financial Times, people familiar with the matter revealed that the executives of crypto-lending company Genesis have the privilege of receiving FTX-backed crypto first.
According to the initial disclosure that was FTT (FTX’s native token launched in 2019) and Serum (established in 2020 with FTX and Alameda support) before its public release, the founder of FTX Sam Bankman-Fried (SBF) has offered a discount to Genesis executives. This can be seen as a massive fraud and unfair to investors.
According to people familiar with the matter, the FTT and Serum tokens and Solana are also accepted by Genesis as collateral for the Alameda mortgage to secure its loans.
Genesis, which collapsed in January of this year, was mainly caused by the sudden collapse of its crypto empire FTX and previous pain from last year’s collapsed crypto hedge fund Three Arrows Capital.
After the collapse of FTX, Genesis has long been known as the primary source of funding for Alameda Research. At the same time, the DCG subsidiary is also the largest creditor of FTX and Alameda, with $226 million in debt, according to US bankruptcy court filings.
Genesis halted customer withdrawals in November following the shocking collapse of FTX and has been in talks with creditors, and has been trying to secure new funding ever since.
Genesis’ bankruptcy comes as the company is under intense regulatory scrutiny after the US Securities and Exchange Commission (SEC) on January 12 charged lenders and exchanges with Cryptocurrency Gemini sells unregistered securities related to a high-yield product called Earn.
Genesis was also embroiled in a high-profile dispute with Gemini, owned by the Winklevoss twins, over $900 million in assets that Gemini customers sent to lenders.
Genesis’ bankruptcy is the most significant blow to the crypto sector, which is still reeling from the collapse of FTX and the arrest of its founder, Sam Bankman-Fried.
Bankman-Fried, once one of the most famous names in the crypto space, is facing eight charges related to the collapse of his crypto empire, including his lying to investors and siphoning off billions of dollars of customer funds for personal use.
To date, Bankman-Fried has pleaded not guilty to all charges, insisting that he did not steal any funds.
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