FTX Bankruptcy Filing Hits Hard
Silvergate Considers Sale Amid 10 Trillion Bank Run
Genesis Faces 30% Layoffs Amid Bankruptcy Rumors
[Asia Economy Reporter Haeyoung Kwon] A U.S. virtual asset specialized bank is considering a company sale after facing a bank run involving deposits worth 10 trillion won. Genesis Global Trading, a virtual asset lending company, has carried out large-scale layoffs. Due to consecutive major incidents such as U.S. interest rate hikes and the bankruptcy filing of FTX, one of the world's top three cryptocurrency exchanges, the virtual asset industry has entered a "harsh ice age," leading to layoffs and sales.
According to major foreign media on the 5th (local time), Silvergate Capital, a digital asset bank in California, USA, announced that it is undergoing business restructuring in response to deposit withdrawal demands amounting to $8.1 billion (10.3 trillion won).
According to Silvergate's preliminary report for the fourth quarter of last year, virtual asset-related deposits decreased by 68% over the past three months, and the company reported a loss of $718 million (920 billion won) and sold some assets to resolve the bank run. Additionally, as a cost-cutting measure, the company laid off 200 employees, accounting for 40% of its workforce.
Bloomberg reported that Silvergate's management mentioned the possibility of a sale during a conference call, stating that the company could become an acquisition target for a larger financial institution.
Genesis Global Trading, a U.S. virtual asset lending company facing bankruptcy, also laid off 30% of its total employees. The layoffs were conducted company-wide rather than targeting specific departments, and according to The Wall Street Journal (WSJ), only 145 employees remain at Genesis.
A Genesis spokesperson stated, "We made the difficult decision to reduce staff to cope with unprecedented challenging circumstances," adding, "The layoffs are part of efforts to continue the business."
Genesis has been experiencing a liquidity crisis due to the coin price crash last year and the bankruptcy of the virtual asset exchange FTX. In June last year, Genesis lent coins worth $2.4 billion (about 3 trillion won) to the virtual asset hedge fund Three Arrows, which suffered massive losses due to a sharp drop in coin prices, resulting in significant losses for Genesis. At that time, the collateral value was only 50% of the loan amount, but then-CEO Michael Moro claimed it was close to 80%. Two months later, in August, Genesis laid off 260 employees, accounting for 20% of its total workforce, and CEO Moro resigned.
Subsequently, Genesis faced another liquidity crisis due to FTX's bankruptcy filing. It is known that $175 million (about 220 billion won) of funds were frozen in FTX accounts. Genesis later attempted to attract investment from Binance, the world's largest virtual asset exchange, but failed. Market speculation suggests that Genesis may file for bankruptcy.
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