VA pension funds exposed to Genesis bankruptcy

VA pension funds exposed to Genesis bankruptcy

  • Genesis owes its top 50 creditors about $3.5 billion, with at least one creditor tied to a $6.8 billion Virginia pension system.
  • Two pension funds in Fairfax County, Virginia invested $35 million in a Genesis creditor.
  • Genesis filed for bankruptcy last week amid exposure to failed companies FTX and Three Arrows Capital.

Genesis Global Capital, the crypto lending unit owned by Digital Currency Group (DCG), filed for Chapter 11 bankruptcy protection on Thursday. Among the companies exposed to the lender in dispute are two public pension funds in Fairfax County, Virginia.

Genesis estimated more than 100,000 creditors and claimed $5.1 billion in liabilities, according to the bankruptcy filings. The firm owes its top 50 creditors about $3.5 billion, and one of the creditors has ties to a nearly $7 billion pension fund system in Virginia.

The pension fund pair invested $35 million in a VanEck fund, which is listed as a creditor of Genesis. The Fairfax County Employees’ Retirement System and the Fairfax County Police Officers’ Retirement System were investors in investment manager VanEck’s New Financial Income Fund. There was a $53 million claim against Genesis.

“The fund is designed to pursue income opportunities for investors through short-term lending arrangements with digital asset entities through a streamlined approach that alleviates the operational burden of direct digital asset lending,” according to a statement. press release announcing the investment of the retirement system in the VanEck fund. last year. “This can also result in potentially lower volatility compared to direct exposure to digital assets.”

Genesis’s financial woes stem from its exposure to the defunct Three Arrows Capital crypto fund after the investment firm failed to repay in full a $2.3 billion loan last year. Genesis had $175 million locked up on Sam Bankman-Fried’s downed FTX crypto exchange. DCG, the parent company of Genesis, has also cut costs by halting its dividend payments.

“Unfortunately, the Genesis fight shows that the FTX contagion is not over, and this may further slow institutional adoption and trust,” Jack Tan, co-founder of cryptocurrency trading platform WOO Network, told Insider.

Genesis’ first-day hearing in its bankruptcy case is scheduled for Monday at 2 pm ET.

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