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The crypto lending firm Genesis has filed for bankruptcy in the Southern District of New York, becoming the latest casualty of the cryptocurrency market turbulence that has unsettled investors since the November crash of the FTX crypto exchange.
Genesis' Bankruptcy Filing
New documents reveal that Genesis owes around $3.4 billion to its largest 50 creditors. Among these creditors is the Stellar Development Foundation, an organization associated with the Stellar blockchain and its cryptocurrency, XLM.
According to the bankruptcy filing, Genesis owes approximately $13.2 million to the Stellar Development Foundation. The foundation, describing itself as a non-profit organization, ranks as the 42nd largest creditor of Genesis.
A representative from the Stellar Development Foundation stated in an email to Forbes that in 2022, the organization provided a “limited series of loans” to Genesis' institutional lending division. They emphasized that the outstanding demand represents an insignificant portion of their overall treasury and has no impact on their operations, as they remain well-funded to fulfill their mission of creating equal access to the global financial system.
Stellar Development Foundation's Mission
The Stellar Development Foundation's mission is to support the “development and growth” of the open-source Stellar network. According to the foundation's website, Stellar collaborates with well-known investors and entrepreneurs from Silicon Valley, including venture capitalist Keith Rabois, Stripe CEO Patrick Collison, and OpenAI CEO Sam Altman.
The foundation's venture capital arm, Stellar Foundation Enterprise Fund, has invested over $55 million in cryptocurrency and payment startups. The foundation also collaborates with organizations such as the United Nations High Commissioner for Refugees (UNHCR) and payment company MoneyGram on various initiatives.
Jed McCaleb's Background
Jed McCaleb, 48, was one of the earliest software engineers to build a cryptocurrency business. In 2010, he founded Mt.Gox, which became the first major Bitcoin exchange. He sold Mt.Gox in 2011 before it was hacked.
In 2011, McCaleb began developing the XRP token's source code and partnered with Ripple, a payment startup, in 2012. Within a year, McCaleb left Ripple due to disagreements with other founders. He signed a settlement agreement limiting the amount of XRP he could sell at once.
McCaleb, whose estimated net worth is $2.4 billion according to Forbes, is one of the few crypto magnates who retained their wealth after the recent cryptocurrency crash. This is because McCaleb sold most of his cryptocurrency holdings at the peak market prices.
Genesis' bankruptcy filing has brought Stellar Development Foundation into the spotlight as one of its creditors. However, the foundation remains financially stable and committed to its mission of providing global financial system access, unaffected by the outstanding debt from Genesis.
