Gemini: Genesis’ irresponsible lending to 3AC ultimately led to the company’s bankruptcy

金色财经 · 2023-07-07T22:33:03.000Z

[Gemini: The irresponsible loans provided by Genesis to 3AC eventually led to the company's bankruptcy] Golden Finance reported that Gemini has filed a fraud lawsuit against DCG and Barry Silbert, specifically accusing Genesis of distorting its risk management process, including 3AC. of counterparties provided huge loans, in part because these counterparties benefited from GBTC, another subsidiary of DCG. The lawsuit details loans totaling $2.3 billion to 3AC and suggests that the collateral value of the deal was less than 50% of the total loan amount. Part of this collateral is actually GBTC shares. During this period, 3AC’s trading strategy was primarily focused on trying to arbitrage the difference in value of GBTC by trading the NAV premium. Ultimately, GBTC will trade at a discount to NAV. The lawsuit alleges that it was these irresponsible loans to 3AC that ultimately led to Genesis' bankruptcy and that the loans were motivated by the benefits it brought to Barry Silbert and DCG. DCG said it injected $1.1 billion into Genesis to cover up the bankruptcy. The capital injection is a promissory note due in 2032, which may ostensibly improve Genesis' balance sheet, but primarily represents a commitment to pay cash in the future. Under generally accepted accounting principles (GAAP), such notes are included in the "current assets" category, which generally excludes the long-term assets of affiliates. To mask this misclassification, it was excluded from the average loan term for the category.

[Gemini: Genesis' irresponsible loans to 3AC eventually led to the company's bankruptcy] Golden Finance reported that Gemini has filed a fraud lawsuit against DCG and Barry Silbert, specifically accusing Genesis of distorting its risk management process and providing huge loans to counterparties including 3AC, in part because these counterparties benefited from GBTC, another subsidiary of DCG. The lawsuit details a total of $2.3 billion in loans to 3AC and shows that the collateral value of the transaction was less than 50% of the total loan amount. Part of this collateral was actually GBTC shares. During this period, 3AC's trading strategy focused on trying to arbitrage the value difference of GBTC by trading NAV premiums. Ultimately, GBTC will trade at a price below net asset value. The lawsuit claims that it was these irresponsible loans to 3AC that ultimately led to Genesis' bankruptcy, and that the motivation for these loans was that it brought benefits to Barry Silbert and DCG. DCG said its $1.1 billion injection into Genesis was to cover up the bankruptcy. The cash injection was a promissory note due in 2032, which on the surface may have improved Genesis' balance sheet, but mainly represented a promise to pay cash in the future. Under generally accepted accounting principles (GAAP), such notes are classified in the "current assets" category, which generally excludes long-term assets of subsidiaries. To hide this misclassification, it was excluded from the average loan maturity in that category.