Saturday, February 4, 2023

Ex-Genesis execs raised cash for crypto hedge fund before bankruptcy

Crypto broker Genesis files for Chapter 11 bankruptcy

Simply weeks before crypto lender Genesis filed for bankruptcy, three former staff of the corporate had secured hundreds of thousands of {dollars} for a brand new crypto hedge fund, in keeping with correspondence considered by CNBC.

Matt Ballensweig, who left Genesis in September after greater than 5 years on the agency, despatched a message to a potential investor in mid-December, concerning a fund he was beginning known as Searching Hill Digital. Ballensweig mentioned he’d already secured $2.5 million from Bessemer Enterprise Companions at a $30 million post-money valuation, and wrote within the message that he and his companions have been within the strategy of elevating one other $5 million.

The fund’s “flagship product” would go reside within the first quarter of 2023, the message mentioned.

Different companions within the fund would come with Martin Garcia, who spent greater than six years at Genesis, and Reed Werbitt, Genesis’ former head of buying and selling, the message mentioned. Werbitt, Garcia, and Ballensweig all left Genesis across the identical time in 2022.

Genesis, which is owned by Barry Silbert’s Digital Forex Group, filed for bankruptcy safety on Thursday, the most recent casualty within the trade contagion brought on by the collapse of crypto trade FTX in November. In its bankruptcy submitting, Genesis listed over 100,000 collectors, with mixture liabilities starting from $1.2 billion to $11 billion {dollars}.

Ballensweig was named in authorized filings surrounding the implosion of Genesis’ lending e book. Gemini, a crypto trade and main Genesis shopper, accused Ballensweig of falsely reassuring Gemini in July that Genesis was financially secure. Gemini claimed that Ballensweig informed its representatives that Genesis had “capital to function… for the long run,” in keeping with court docket filings.

Ballensweig didn’t reply to a request for touch upon the allegations made in opposition to him by Gemini or on his latest capital increase.

Ballensweig spent his closing 9 months at Genesis as managing director and co-head of buying and selling and lending.

The ex-Genesis staff teamed up with Adam Guren from hedge fund Searching Hill, Ballensweig mentioned. Searching Hill is a $718 million hedge fund, which launched in 2010 and moved into digital asset investing in 2020 with a crypto opportunities fund.

Neither Searching Hill nor Bessemer instantly responded to a request for remark.

Ballensweig pitched the flagship product as an “alpha multistrat (delta impartial),” or a fund specializing in multi-strategy, low-risk, high-return investments. He added that the trio would additionally launch two different beta merchandise together with a “Prime 25 Index” and a “DeFi beta.”

“Assume you would be a helpful early accomplice,” Ballensweig mentioned in his pitch.

Ballensweig is not the one Genesis alum searching for to launch a fund. Roshun Patel, a former vice chairman at Genesis who left the corporate in March after virtually 4 years, was raising cash for a brand new fund in mid-2022. CNBC reached out to Garcia, Werbitt and Patel for touch upon their raises however didn’t instantly hear again.

WATCH: Crypto lender Genesis files for bankruptcy

Crypto lender Genesis files for bankruptcy, and bitcoin reclaims $21,000 level: CNBC Crypto World

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