Ex-Genesis execs claimed they raised money for crypto hedge fund before bankruptcy

Crypto broker Genesis files for Chapter 11 bankruptcy

Just weeks before crypto lender Genesis filed for bankruptcy, three former employees of the company claimed they had secured millions of dollars for a new crypto hedge fund, according to correspondence viewed by CNBC.

Matt Ballensweig, who left Genesis in September after more than five years with the company, sent a message to a potential investor in mid-December about a fund he was setting up called Hunting Hill Digital. Ballensweig said he had already raised $2.5 million from Bessemer Venture Partners at a $30 million post-cash valuation, writing in the post that he and his partners were in the process of raising another $5 million.

Bessemer told CNBC in an email that they are not an investor in Hunting Hill Digital.

The fund’s “flagship product” would go live in the first quarter of 2023, the report said.

Other partners in the fund include Martin Garcia, who spent more than six years at Genesis, and Reed Werbitt, Genesis’ former head of trading, the report said. Werbitt, Garcia and Ballensweig all left Genesis around the same time in 2022.

Genesis, which is owned by Barry Silbert’s Digital Currency Group, filed for bankruptcy protection on Thursday, the industry’s latest casualty caused by the collapse of crypto exchange FTX in November. In its bankruptcy filing, Genesis listed more than 100,000 creditors, with total liabilities ranging from $1.2 billion to $11 billion dollars.

Ballensweig was mentioned in legal documents surrounding the implosion of the lending book of Genesis. Gemini, a crypto exchange and major Genesis client, accused Ballensweig of falsely reassuring Gemini in July that Genesis was financially stable. Gemini alleged that Ballensweig told his representatives that Genesis had “capital to operate … for the long haul,” according to court documents.

Ballensweig did not respond to a request for comment on the allegations against him by Gemini or on his recent capital raise.

Ballensweig spent his final nine months at Genesis as general manager and co-head of commerce and lending.

The ex-Genesis employees worked with Adam Guren of hedge fund Hunting Hill, Ballensweig said. Hunting Hill is a $718 million hedge fund that launched in 2010 and moved into digital asset investing with a crypto opportunity fund in 2020.

Hunting Hill did not immediately respond to a request for comment.

Ballensweig presented the flagship product as an “alpha multistrat (delta neutral)” or a fund specializing in multi-strategy, low-risk, high-return investments. He added that the trio would also launch two other beta products, including a “Top 25 Index” and a “DeFi beta.”

“Think you’d be a valuable early partner,” Ballensweig said in his pitch.

Ballensweig isn’t the only Genesis alum to launch a fund. Roshun Patel, a former vice president at Genesis who left the company in March after nearly four years, was raising money for a new fund in mid-2022. CNBC reached out to Garcia, Werbitt and Patel for comment on their raises, but didn’t immediately hear back.

WATCH: Cryptocurrency lender Genesis is filing for bankruptcy

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

Leave a Comment