Prior to an abrupt change in the market, SBF had invested a huge amount of money, which amounted to $1 billion, in Genesis Digital Assets, a bitcoin miner headquartered in Cyprus. To grasp the magnitude of this expenditure, let us dive deeper into the specifics.
Since the commencement of 2022, the crypto market has been dealing with liquidity matters, causing trouble for many companies to stay afloat. Several renowned businesses have been forced to shut down due to different reasons.
FTX, one of the world’s leading crypto exchanges, seemed to be running normally from the outside. However, the empire of SBF, the exchange’s CEO, started to deteriorate when liquidity issues became an issue. Subsequently, FTX declared bankruptcy, and SBF resigned from his post as CEO.
Since then, there have been numerous updates in relation to the FTX-SBF incident, with new details emerging almost daily.But before the situation took a bad turn, SBF had made a substantial $1 billion investment in Genesis Digital Assets, a Cyprus-based bitcoin miner. Let’s take a closer look at how large an expenditure this was for SBF.
Genesis Digital is a major component of FTX’s insolvency proceedings and is considered a valuable asset.
Genesis Digital is one of the most significant investments FTX has made, yet the diminishing worth of Bitcoin-related companies has affected its value.
According to a WSJ exclusive, the funds from the investment in Alameda were split in two for Genesis’ operations. This information was obtained from Cyprus company registration documents and from people in the know. In addition, more than $500 million was used to purchase current shares from the two Genesis Digital co-founders.
A spokeswoman for the firm stated that they had received monies at market value from Alameda, and that its founders own a majority of the company. FTX’s current CEO stated that the $5 billion portfolio is a major component of the remaining balance for the creditors, and that he was concerned about the decrease in its value during this time in the cryptocurrency space.
SBF was appointed to the Genesis Digital board in October 2021 after they were given $100 million from Alameda, and he increased his stake by investing an extra $550 million at the beginning of 2022. Following this, Alameda supplied $500 million in newly issued shares for its operations, which gave them a 20% stake.
A quarter of Genesis Digital’s business came from Kazakhstan, and when the government began to withdraw electricity, investors wanted to move away from the area. The increased electricity tariff led to further problems, so Genesis Digital began relocating to their Texas data centers. Ultimately, the pressure caused SBF to resign and file for bankruptcy the subsequent day.