Barron’s Analyst: “With This Development, Cryptocurrency Winter Is Warming Up”

bankrupt cryptocurrency Credit institution Genesis Global and its major creditors have reached an agreement to settle the bankruptcy case.

For investors who are creditors of Genesis, this means they can get some of their money back more quickly. But the implications for the crypto industry are greater.

Barron’s: “Bankruptcy Deal Could Warm the Crypto Winter”

Joe Light of the business magazine Barron’s shared his thoughts on the importance of the latest development for the crypto market. According to Light, the bankruptcy settlement could “warm the cryptocurrency winter.”

Before seeking bankruptcy protection last month, Genesis was one of the top crypto lenders.

It lends money to institutional investors such as hedge funds for trading, sometimes borrowing from small investors through platforms that allow them to deposit crypto for double-digit returns.

One of these platforms was Gemini Earn, a product offered by the crypto firm founded by the Winklevoss twins, which owes their customers nearly $1 billion.

These connections make a contentious and protracted bankruptcy case particularly dangerous for the crypto market. Some investors and industry executives believe that if Genesis’ creditors are unable to recover the funds quickly, bitcoin or afraid that they might sell other tokens urgently.

This, in turn, could lower cryptocurrency prices, potentially causing more investors to breach margin requirements and be forced to sell in a vicious circle.

A possible settlement could circumvent this scenario, even if it means that some creditors will never receive full compensation.

“Today’s agreement is a positive step forward and provides a clear path for a compromise-based resolution that maximizes the asset available,” attorney Paul Aronzon, a member of the board’s special committee dealing with Genesis’ bankruptcy, said in a statement.

According to Barron’s analyst Light, if the deal is completed, it could cut the impact of the dominoes that started to fall in the cryptocurrency industry last year.

*Not investment advice.