Just weeks before crypto lender Genesis requested bankruptcythree former company employees claimed they had raised millions of dollars for a new cryptocurrency hedge fund, according to correspondence seen by CNBC.
Matt Ballensweig, who left Genesis in September after more than five years with the company, messaged a potential investor in mid-December about a fund he was starting called Hunting Hill Digital. Ballensweig said he had already raised $2.5 million from Bessemer Venture Partners at a post-money valuation of $30 million, writing in the message that he and his partners were in the process of raising another $5 million.
Bessemer told CNBC in an email that they are not investors in Hunting Hill Digital.
The fund's "flagship product" would go live in the first quarter of 2023, the message said.
Other partners in the fund would include Martin Garcia, who spent more than six years at Genesis, and Reed Werbitt, Genesis's former chief operating officer, the message said. Werbitt, Garcia and Ballensweig left Genesis around the same time in 2022.
Genesis, which is owned by Barry Silbert's digital currency group, declared bankrupt protection on Thursday, the latest casualty in the industry contagion caused by the collapse of crypto exchange FTX in November. In its bankruptcy filing, Genesis listed more than 100,000 creditors, with aggregate liabilities ranging from $1.2 billion to $11 billion.
Ballensweig was named in legal documents related to the implosion of the Genesis loan book. Gemini, a cryptocurrency exchange and a major Genesis client, accused Ballensweig of falsely assuring Gemini in July that Genesis was financially stable. Gemini claimed that Ballensweig told his representatives that Genesis had "capital to operate...for the long term," according to court documents.
Ballensweig did not respond to a request for comment on the allegations made against it by Gemini or its recent capital increase.
Ballensweig spent his last nine months at Genesis as managing director and co-head of transactions and lending.
The former Genesis employees were associated with Adam Guren of the Hunting Hill hedge fund, Ballensweig said. Hunting Hill is a $718 million hedge fund, which launched in 2010 and moved into investing in digital assets in 2020 with a crypto opportunities fund.
Hunting Hill did not immediately respond to a request for comment.
Ballensweig introduced the flagship product as an "alpha (delta neutral) multistrat," or a fund specializing in high-yield, low-risk, multi-strategy investments. He added that the trio would also launch two other beta products, including a "Top 25 Index" and a "DeFi beta."
"I think you would be a valuable early partner," Ballensweig said at his pitch.
Ballensweig isn't the only Genesis alum looking to launch a fund. Roshun Patel, a former Genesis vice president who left the company in March after nearly four years, was raising cash for a new fund in mid-2022. CNBC contacted Garcia, Werbitt and Patel for comment on their increases but did not immediately hear back.
