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Crypto broker Genesis has laid off almost a third of its workforce, which now stands at 145 employees, Coindesk reported on Thursday, citing a person familiar with the matter.
The report said that Genesis's sales and business-development departments "have been especially hard hit."
The cuts come just a day after Genesis sent a letter to clients, saying that it needs more time to come up with a solution for the troubles at its lending unit and that it would be “reducing costs and driving efficiencies,” citing the challenging climate for crypto firms.
"“These measures are part of our ongoing efforts to move our business forward. We sincerely appreciate the hard work of our talented and dedicated team as we continue to work to identify the best outcome for Genesis’s business, clients and employees for the long term," Genesis said in a statement.
In August, the company let go of 20% of its employees, after announcing major losses linked to the 3AC fallout – US$1.2 billion is claimed against the now defunct hedge fund. Its parent company Digital Currency Group had assumed some of its liabilities.
Genesis also revealed that it was exposed to FTX by at least US$175 million, via its derivatives trading business.
DCG Shutters Wealth Management Biz
Separately, Genesis parent company DCG confirmed that is shutting down a wealth-management division called HQ, which had US$3.5 billion in assets under management, The Information reported on Thursday.
"Due the state of the broader economic environment and prolonged crypto winter presenting significant headwinds to the industry, we made the decision to wind down HQ" as of Jan. 31, DCG said in a statement Thursday.
Apart from Genesis, DCG also owns investment management company Grayscale, Coindesk, bitcoin mining advisory firm Foundry, crypto exchange Luno, and end-to-end crypto trading platform TradeBlock.
Showdown with Gemini
Genesis is currently embroiled in a dispute with crypto exchange Gemeni – it owes users of the Gemini Earn program some US$900 million. It was the program's exclusive yield source and sent a lot of those funds on to DCG, which bought some mixture of GBTC and DCG stock.
Earlier this week, Cameron Winklevoss, co-founder of Gemini, wrote an open letter earlier this week to Barry Silbert, chief executive of DCG, Genesis's parent company, accusing him of “bad faith stalling tactics,” claiming that DCG owes Gemini aa total of US$1.675 billion.
“You continue to refuse to get into a room with us to hash out a resolution. In addition, you continue to refuse to agree to a timeline with key milestones. Every time we ask you for tangible engagement, you hide behind lawyers, investment bankers, and process. After six weeks, your behavior is not only completely unacceptable, it is unconscionable,” Winklevoss said in the letter, adding that Silbert has until January 8 to find a solution.
Silbert replied on Twitter saying that figure was innacurate.
DCG did not borrow $1.675 billion from Genesis— Barry Silbert (@BarrySilbert) January 2, 2023
DCG has never missed an interest payment to Genesis and is current on all loans outstanding; next loan maturity is May 2023
DCG delivered to Genesis and your advisors a proposal on December 29th and has not received any response
It is not clear what will happen if a solution is not found by this deadline, though as we've wrote previously, one way to read the statement is that Gemini is concerned about being sued by investors for the fees.