Genesis seeks $1B emergency loan ahead of business suspension

Troubled crypto lender Genesis was reportedly seeking a bailout before suspending withdrawals this week.

Genesis Global Capital has become one of the latest victims of the FTX collapse and crypto transition. As reported by BeInCrypto, the lending platform suspended withdrawals on the platform on November 16.

On November 18, the WSJ revealed that the company had sought a $1 billion loan prior to the trading suspension. The outlet cited a “confidential fundraising document” that it had access to.

As of Monday, Genesis cited “liquidity constraints due to certain illiquid assets on its balance sheet” for the loan, according to the document. According to the docs:

“Operated primarily on deposits driven by retail programs and origination partners (i.e., Gemini Earn) and institutional customers testing liquidity,”

The Gemini is a yield-yielding product offered by the Earnhardt Winklevoss Twins’ Gemini Exchange. According to Bloomberg, Gemini Earn has about $700 million in customer funds.

Genesis liquidity crisis deepens

A Genesis spokesperson told the WSJ that the document is out of date, and there is positive momentum in increasing liquidity. “Genesis was exploring all possible options amid the liquidity crunch resulting from the FTX news,” she said.

Almeida owes a debt to Genesis. Furthermore, it uses FTX native token FTT as collateral. FTT has taken a massive 93.6% drop over the past fortnight, rendering the token and any outstanding collateral practically worthless.

Genesis also had toxic loans with the now-defunct crypto hedge fund Three Arrows Capital. Genesis lent $2.4 billion to 3AC, and its parent company Digital Currency Group has a $1.2 billion claim against the firm.

In addition, DCG subsidiaries include crypto asset manager Grayscale and BTC mining firm Foundry. Grayscale’s GBTC fund has seen its premium drop by -40% this month.

According to crypto YouTuber Lark Davis, Genesis was the largest bitcoin OTC desk and lender in the industry:

Gemini’s exodus begins

The fallout of the FTX collapse has not yet been fully realized and could be far-reaching. Fearing another bank run, Mithun Tweeted that customer funds were fully backed on 17 November.

“All client funds held on the Gemini Exchange are 1:1 and available for withdrawal at any time.”

However, it seems that troubled crypto investors have already begun withdrawals. Ki Young Ju, the founder of CryptoQuant, reported an increase in Ethereum withdrawals from the exchange yesterday.

In addition, Nansen informed of That Gemini saw withdrawals of $570 million on November 17.


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