- From August 2021 to April 2022, Genesis Digital got $1.15 billion from Alameda in 4 parts.
- Genesis Digital is a US-based crypto mining firm that is not related to Genesis Capital.
- Genesis Digital independently raised $556 million in funding for expansions.
Crypto mining company Genesis Digital had the biggest venture investment made by FTX’s sister company Alameda. Bloomberg disclosed on December 3 that the mining company raised $1.15 billion from Alameda in four different transactions. $100 million in August, $500 million in January, $250 million in February, and $250 million in April 2022.
Genesis Digital is among the major US-based Bitcoin mining companies, and it is unrelated to Genesis Capital, which had major exposure to FTX. And had $175 billion in funds locked away in the FTX trading account.
Former FTX CEO Sam Bankman-Fried, though initially denied to regulators. But recently recognized have participation in Alameda’s venture decisions, including its investment in Genesis Digital.
Genesis Digital had also raised $556 million in two different funding rounds. Some of the funds sought from purchasing 20,000 Bitcoin miners from Canaan, from the lone star state of Texas. And company expansion in North European and US operations.
The mining sector is badly affected by the negative trifecta of mining problems. The sector has seen a squeeze in profits due to rising energy costs, increased mining difficulties, and a drop in BTC prices.
The third quarter of this year’s mining report from the Hashrate Index also highlighted the above factors. Which eventually led to a significantly lower hash price and higher cost to produce 1 Bitcoin. Also, the revenue earned by miners is now at a two-year low, at $11.67 million.
In a piece of sadder news, the ongoing crypto winter is expected to last longer than expected, as the investors’ morale has been badly hurt due to the recent FTX collapse. Reports also suggest that stablecoin dominance has recently reached a new high of 18%. This further signals that the liquidity crisis might continue till 2023.
Genesis owes Gemini’s clients $900 million.
With the help of Genesis, Gemini used to offer a chance to its investors to earn 8% interest. Investors were required to lend their cryptocurrencies, including Bitcoin and fiat-backed stablecoins.
Then Genesis got its $175 million stuck in the FTX account, and they had halted withdrawals since November 16. According to the exchanges status page, the problem with deposits with Gemini Earns first appeared on November 16.
Conclusion
Another victim of contagion surfaces, revealing the scale of its attack. It is said that one bad apple rots the complete basket. We are not saying FTX is a bad apple, but the crux of the sayings fits here. One exchange gets caught mishandling user funds and files for bankruptcy with 134 associated companies. At the time, everyone associated with FTX had some exposure to the contagion risk. Only time can tell when can the crypto market be totally out of this mess.