![Crypto broker Genesis files for Chapter 11 bankruptcy](https://image.cnbcfm.com/api/v1/image/107181650-Screen_Shot_2023-01-20_at_55110_AM.png?v=1674214689&w=750&h=422&vtcrop=y)
Just weeks before crypto lender Genesis filed for bankruptcy, three former company employees claimed to have secured hundreds of thousands of dollars for a recent cryptocurrency hedge fund, according to correspondence viewed by CNBC.
Matt Ballensweig, who left Genesis in September after greater than five years with the corporate, sent a message in mid-December to a potential investor about a fund he began called Hunting Hill Digital. Ballensweig said he had already secured $2.5 million from Bessemer Enterprise Partners after a $30 million valuation, and said in a message that he and his partners were within the means of raising one other $5 million.
Bessemer told CNBC in an email that they will not be investors in Hunting Hill Digital.
According to the announcement, the fund’s “flagship product” can be launched in the primary quarter of 2023.
Other partners within the fund include Martin Garcia, who spent greater than six years at Genesis, and Reed Werbitt, former head of trading at Genesis. Werbitt, Garcia and Ballensweig left Genesis around the identical time in 2022.
Genesis, owned by Barry Silbert’s Digital Currency Group, filed for bankruptcy protection on Thursday, the newest casualty of the industry contagion attributable to the collapse of cryptocurrency exchange FTX in November. In its bankruptcy filing, Genesis listed over 100,000 creditors with total liabilities starting from $1.2 billion to $11 billion.
Ballensweig was named within the Genesis Loan Book Implosion Laws. Gemini, a cryptocurrency exchange and Genesis’ most important client, accused Ballensweig of falsely assuring Gemini in July that Genesis was financially stable. Gemini claimed that Ballensweig told its representatives that Genesis had “the capital to operate … in the long term,” according to court records.
Ballensweig didn’t respond to a request for comment on the allegations made by Gemini or its recent capital increase.
Ballensweig has spent the last nine months at Genesis as Managing Director and Co-Chair of Trade and Lending.
Ballensweig said former Genesis employees teamed up with Adam Guren of Hunting Hill hedge fund. Hunting Hill is a $718 million hedge fund that was established in 2010 and can be launched in 2020. Crypto Opportunity Fund.
Hunting Hill didn’t immediately respond to a request for comment.
Ballensweig introduced the flagship product as “alpha multistrat (delta neutral)” or a fund specializing in low-risk, high-return multi-strategy investments. He added that the trio may also launch two other beta products, including “Top 25 Index” and “DeFi beta”.
“I believe you could be a beneficial early stage partner,” Ballensweig said in his speech.
Ballensweig is not the only Genesis alumnus looking to arrange a fund. Roshun Patel, a former Genesis vp who left the corporate in March after nearly 4 years, was collecting money for a recent fund in mid-2022. CNBC reached out to Garcia, Werbitt, and Patel for comment on their raises, but didn’t immediately receive a response.
WATCH: Cryptocurrency lender Genesis files for bankruptcy
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