‘The Last Big Whale’: Why the Crypto Contagion of 2022 Eventually Hit Genesis

Michael Jordan, founder at DBA and former co-head of investments at Galaxy Digital, and Alex Pack, managing partner at Hack VC, talk about the potential insolvency of Genesis and DCG, the cycle of credit expansion, and the importance of DeFi to prevent these situations. 

Show highlights:

• what will happen with Genesis and its parent company DCG
• where the insolvency of Genesis might have come from
• how the expansion of crypto lending in 2021 is impacting the markets and the role the Fed played in this expansion
• how the Terra collapse kickstarted a ton of contagion effects in crypto companies
• Alex’s story of why he did not invest in Alameda in 2018
• whether it is possible to prevent the “FTXs of the future”
• the importance of assessing the quality of collateral assets
• the story of when SBF called DeFi a “Ponzi black box”
• the mystery of where FTX Ventures got the $2 billion it planned to invest

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Michael:

• Twitter
• Previous Unchained episodes:
• Is the Collapse of Crypto Lending Over, or Is It Just Starting?

Alex:

• Twitter

Episode Links

Previous coverage of Unchained on Genesis and FTX:

• Why Genesis Could Very Well Be Insolvent, Not Just Illiquid
• Jesse Powell and Kevin Zhou on How FTX and Alameda Lost $10 Billion
• Is the Collapse of Crypto Lending Over, or Is It Just Starting?
• Did the Bahamian Government Direct SBF and Gary Wang to Hack FTX?
• The Chopping Block: Why Lenders Didn’t Liquidate Alameda When It Was Underwater 
• Erik Voorhees and Cobie on Why FTX Loaned Out Customers’ Assets
• The Chopping Block: FTX: The Biggest Collapse in the History of Crypto?
• Sam Bankman-Fried on How to Prevent the Next Terra and 3AC

Genesis:

• Unchained:
  • Genesis Warns of Bankruptcy If Funding Plans Fail: Report
  • On-chain Analysts ID 432 GBTC Addresses After Grayscale Says No to Proof-of-Reserves
• WSJ: Crypto Lender Genesis Asks Binance and Apollo for Cash
• Decrypt: Digital Currency Group Says No Imminent Threat Despite Owing Genesis $575M
• The Block: DCG CEO Barry Silbert updates shareholders, says company will emerge ‘stronger’

FTX Collapse:

• First declaration document
• Unchained: FTX Bankruptcy Overseer Says Company’s Collapse Is Worst He’s Ever Seen
• SBF tweet: FTX files for Chapter 11 bankruptcy protection
• Bloomberg: Transcript: Sam Bankman-Fried and Matt Levine on How to Make Money in Crypto