Genesis Global 2023: Intra-Group Note, No Real Repayment Source │ GP/LP Analysis - 3 Red Flags │ File 166 T2

<p></p><p>This episode is part of Financial Forensics Labs — two shows, one forensic methodology: The Due Diligence Files traces how institutions collapse, The Signal Files traces how the good calls get made. Built from primary-record research by a 15-year capital markets professional.</p><p>Get to know the framework, the other show, and the tools built from it — all in one place.</p><p>Explore </p><p><a href="https://www.financialforensicslabs.com.ar/">⁠⁠⁠⁠Financial Forensics Labs — Forensic Finance Intelligence⁠⁠⁠</a></p><p><br></p><p></p><p>Genesis Global Capital 2023: intra-group crypto lending gap and counterparty concentration risk. If a parent company can erase a billion-dollar loss at its subsidiary with a piece of paper promising to pay it back in ten years, why would any parent ever choose cash instead?</p><p>This is the GP/LP institutional analysis of Genesis Global Capital and Digital Currency Group (DCG) — the mechanism by which a real, already-realized lending loss was converted into an intercompany promissory note that let both the parent and the subsidiary keep operating as though the loss had been resolved, and why that kind of note is not the same thing as capital.</p><p>Genesis lent institutional money to crypto hedge funds and trading desks, funded largely by retail crypto deposited through partner exchanges. Three Arrows Capital (3AC), a highly leveraged Singapore-based fund with total exposure to Genesis above $2 billion, could not meet a margin call after Terra and Luna collapsed in May 2022. Genesis liquidated the collateral it could reach — Grayscale Bitcoin Trust (GBTC) shares, Grayscale Ethereum Trust (ETHE) shares, and smaller tokens — and was still short roughly $1.2 billion. That number was not an estimate. It was a realized, permanent loss, fixed the moment the collateral was sold.</p><p>In June 2022, DCG issued Genesis a $1.1 billion promissory note, maturing in 2032, at 1% interest. No cash moved. No crypto moved. We break down the three questions that were never forced to a real answer at the time: what was the note&#39;s actual, independent source of repayment; why did its terms look nothing like a genuine arm&#39;s-length risk transfer; and why did Genesis keep marketing new Gemini Earn deposits without disclosing the loss already sitting behind the program&#39;s economics.</p><p>More than 340,000 Gemini Earn depositors, over $900 million, were frozen when Genesis halted withdrawals on November 16, 2022, days after FTX&#