Michael Patchen has stepped down from his role as chief risk officer (CRO) at crypto-broker Genesis Trading after only three months of service, according to an individual close to the matter. Citing a Bloomberg Twitter post:
“Michael Patchen has left his role as chief risk officer at crypto-brokerage Genesis after three months, according to a person familiar with the matter.”
Patchen’s decamping is the latest addition to a long list of exits that the New York-based lender has reported this year.
According to a Bloomberg report, several high-ranking employees have departed from the company. Over the past summer, Genesis Trading announced that it was letting 20% of its staff go as an aftermath of the prevailing crypto winter and its dealings with the bankrupt hedge fund Three Arrows Capital, now under liquidation.
Among those captured in the staff cuts was the company’s former Chief Executive Officer, Michael Moro, who stepped down in August and was replaced by the firm’s Chief Operating Officer (COO) Derar Islim as interim CEO. Tom Conheeney, an experienced finance executive, and Michael Patchen were brought in during the same period as senior advisor and CRO, respectively. The two came in to help the company navigate the challenging market conditions and wave off the effects of the company’s exposure to Three Arrows Capital.
Revelations by Genesis crypto lending business indicate that the company had extensive exposure to the failed hedge fund Three Arrows Capital. It was the biggest creditor affected by the collapse of the hedge fund and its supposed inability to meet margin calls.
Nonetheless, the company does not have any outstanding liabilities related to Three Arrows Capital, given that Digital Currency Group, parent of both Genesis and CoinDesk, assumed the liability before filing a $1.2 billion claim against Three Arrows Capital.
Digital Currency Group Assumes Liability
In July, the company’s CEO, Michael Moro, reiterated Genesis’ vision to provide transparency to the community and the entire market. With this, he disclosed developments about the company’s exposure to Three Arrows Capital. He said:
“We previously stated in June that we mitigated losses concerning a large counterparty who failed to meet a margin call. Now that the BVI bankruptcy process has commenced, we can confirm that the counterparty was Three Arrows Capital. The loans to this counterparty had a weighted average margin requirement of over 80%. Once they could not meet the margin call requirements, we immediately sold collateral and hedged our downside.”
Moro also announced that Genesis was working with its parent company, Digital Currency Group (DCG), to find the optimal strategy for isolating the risk further, adding:
“DCG has assumed certain liabilities of Genesis related to this counterparty to ensure we have the capital to operate and scale our business for the long term.”
Three Arrows Capital-related liabilities are no longer outstanding at Genesis Trading. Moro also reassured the company’s commitment to recover potential residual losses, highlighting that Genesis has ventured into various business sectors, including trading, lending, derivatives, and custody services.
With these, the company has since deployed multiple risk management strategies targeted at ring-fencing its portfolio while leveraging all capabilities for fast and effective risk mitigation. This explains Patchen’s hire and the other leadership additions in August this year.
Noteworthy, however, Genesis has successfully waved off instances of severe market volatility since its inception in 2013. Moving forward, the crypto broker is committed to supporting client needs as well as that of counterparties and together bolsters the company’s steps into the industry’s evolution.
Efforts to get a statement from Patchen or Genesis Company have not been fruitful, as neither has come forward to make any public announcement about the development.
Michael Patchen: Everything You Should Know
From his LinkedIn profile, Patchen served as principal and CRO at AQR Capital Management before joining Genesis three months ago, Barry Silbert’s Digital Currency Group unit. He has also performed at Carlson Capital, SAC Capital, Deutsche bank, and Goldman Sachs, priding himself as a hands-on manager with a broad range of experiences.
Patchen’s core competencies included the following:
- Overseeing a significant enterprise risk effort.
- Researching and trading equity and macro strategies (both hedge fund and long-only).
- Developing large-scale analytics platforms, both stand-alone and in deep partnership with dedicated engineering teams.
