This article comes fromBlockworks, original author: Michael Bodley

Odaily Translator |

Odaily Translator |

Genesis' thorny problems show no signs of ending, and executives are desperately trying to get the company out of the woods.

Genesis cut 30% of its workforce across the company on Thursday, most of them in its institutional sales force, according to three people familiar with the matter. The move spells more trouble, people familiar with the matter said, as the prospect of reviving its troubled core business line dwindles. Two other sources detailed the company's attempts.

Today there are fewer than five salespeople, down from about 12 business development professionals at its peak. This isn't the only restructuring attempt Genesis is making: The company has considered the possibility of spinning off its lending unit, the sources said.

The remaining sales staff included Hanson Birringer, vice president of institutional sales, Josh Barkhordar, head of Americas sales, and a junior sales analyst.

Sources see Marshall's departure as an obvious blow. Prior to joining Genesis, Marshall was responsible for research at CryptoCompare. He also worked for a while in the investment space on Wall Street, including as a portfolio manager at Apollo Global, which provided cryptocurrency-related services last year. Other senior staff reporting to Marshall were also fired.

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Salespeople are the first to leave

The move mirrors a general trend in the crypto market of late, as salespeople need to make significantly fewer calls, a direct consequence of institutional investors pausing trading in large numbers of digital assets as they await the end of the bear market turmoil.

A Genesis spokesperson referred to "unprecedented industry challenges" in a statement, detailing the thinking behind the company's 30 percent layoff.

"Genesis has made the difficult decision to reduce its workforce globally. These actions are part of our ongoing efforts to grow our business," the spokesperson said.

Focusing on cutting costly labor costs is a versatile and viable mechanism to preserve critical cash flow. Even so, there has been no top-down focus on senior staff departures, according to one source.

Marshall did not immediately respond to a request for comment. A spokesperson for Genesis referred to previous company statements and declined further requests for comment.

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Consider spinning off lending business

Meanwhile, Genesis executives have been weighing the prospects and feasibility of overhauling its lending unit, laying out a blueprint for doing so that would mark an escalation in the company's layoffs this week. To that end, the company has been in advanced conversations with Moelis & Company about the prospect of spinning off its crypto credit unit.

Traditional TradFi restructuring specialist Moelis has previously been hired by investment bank Genesis to analyze a wider range of viable funding paths. In addition to Moelis, Genesis has hired other consultants, though it didn't specify who -- some of them at the behest of clients.

The company has three main lines of business: derivatives and spot crypto asset trading, lending and crypto custody. The lending unit has long been viewed by its institutional investors and the service provider counterparties it does business with as a major source of revenue for Genesis.

The firm's interim chief executive, Derar Islim, said the trading business was "fully functioning and, as always, catering to clients' trading needs".

"While we are committed to taking action as quickly as possible, this is a very complex process that will require some additional time," Islam said in a statement on Wednesday. "We believe we will be able to reach a resolution."

Genesis said in November that about $175 million in client funds were frozen in the main trading account on the FTX platform in the fourth quarter of last year, which "did not affect (the company's) market-making activities."

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Does DCG Owe Genesis Nearly $1 Billion?

Gemini co-founder Cameron Winklevoss recently issued an open letter accusing DCG founder Barry Silbert of refusing to cooperate in resolving the problem, demanding that he repay more than $900 million owed to Earn product users.

Silbert responded, “DCG did not borrow $1.675 billion from Genesis. DCG has never defaulted on interest payments to Genesis and is currently repaying all outstanding loans; the next loan due is May 2023. DCG issued a letter to Genesis and Your advisor has submitted a proposal but has not received any response."

Genesis has had a tough 2022, including halting cash withdrawals in its lending unit in November, blaming it at the time for the FTX bankruptcy.

Before its decision to freeze the withdrawal of client assets on the lending platform, the situation was as follows: exposure to the now bankrupt hedge fund company Three Arrows Capital; early 2022, other digital asset lenders collapsed, leading to a contagion of crypto credit crisis its custody business is also facing challenges as many traders withdrew crypto assets from exchanges in the fourth quarter.

Meanwhile, last November 10, Genesis said its funds and outstanding net position in FTX were "not material" to its business and that the collapse of FTX "has not prevented the full operation of our trading business."Less than a week later, the allegedBinance founder CZ was conducting due diligence on bidding for Genesis's large loan assets

. Other market makers followed suit, with B2C2 offering to buy some of Genesis' short-term loans at a discount. Genesis Global Capital has $2.8 billion in total loans by the end of the third quarter of 2022.

Genesis said in November that “over the past two days, we have recorded record trading volumes, maintained our leading market share and supported our clients’ continued derivatives demand.”