Just weeks before crypto lender Genesis filed for bankruptcy, three former employees of the corporate claimed that they had secured hundreds of thousands of dollars for a recent crypto hedge fund, in accordance with correspondence viewed by CNBC.
Matt Ballensweig, who left Genesis in September after greater than five years on the firm, sent a message to a prospective investor in mid-December, regarding a fund he was starting called Hunting Hill Digital. Ballensweig said he had already secured $2.5 million from Bessemer Enterprise Partners at a $30 million post-money valuation, and wrote within the message that he and his partners were within the technique of raising one other $5 million.
Bessemer told CNBC in an email that they aren’t an investor in Hunting Hill Digital.
The fund’s “flagship product” would go live in the primary quarter of 2023, the message said.
Other partners within the fund would come with Martin Garcia, who spent greater than six years at Genesis, and Reed Werbitt, Genesis’ former head of trading, the message said. Werbitt, Garcia, and Ballensweig all left Genesis around the identical time in 2022.
Genesis, which is owned by Barry Silbert’s Digital Currency Group, filed for bankruptcy protection on Thursday, the most recent casualty within the industry contagion attributable to the collapse of crypto exchange FTX in November. In its bankruptcy filing, Genesis listed over 100,000 creditors, with aggregate liabilities starting from $1.2 billion to $11 billion dollars.
Ballensweig was named in legal filings surrounding the implosion of Genesis’ lending book. Gemini, a crypto exchange and major Genesis client, accused Ballensweig of falsely reassuring Gemini in July that Genesis was financially stable. Gemini claimed that Ballensweig told its representatives that Genesis had “capital to operate… for the long run,” in accordance with court filings.
Ballensweig didn’t reply to a request for comment on the allegations made against him by Gemini or on his recent capital raise.
Ballensweig spent his final nine months at Genesis as managing director and co-head of trading and lending.
The ex-Genesis employees teamed up with Adam Guren from hedge fund Hunting Hill, Ballensweig said. Hunting Hill is a $718 million hedge fund, which launched in 2010 and moved into digital asset investing in 2020 with a crypto opportunities fund.
Hunting Hill didn’t immediately respond to a request for comment.
Ballensweig pitched 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 would be a helpful early partner,” Ballensweig said in his pitch.
Ballensweig is not the only Genesis alum looking for to launch a fund. Roshun Patel, a former vp at Genesis who left the corporate in March after almost 4 years, was raising 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 hear back.
WATCH: Crypto lender Genesis files for bankruptcy
