Genesis Requested A $1B Emergency Loan From Investors Before Suspending Withdrawals

Zinger Key Points
  • “Genesis had been exploring all possible options amidst the liquidity crunch resulting from the FTX news," says a Genesis spokesperson.
  • The fall of Three Arrows Capital, a crypto hedge firm that filed for bankruptcy, inflicted damage to Genesis early this year.

Cryptocurrency lender Genesis was seeking a $1 billion emergency loan from investors before telling customers it was suspending withdrawals this week, reported the Wall Street Journal.

The newspaper claimed to have seen physical evidence of a confidential document in which the company expressed the need for this money based on a "liquidity crunch due to certain illiquid assets on its balance sheet.”

As we know, the funds never arrived.

“There is ongoing run on deposits driven mainly by retail programs and partners of Genesis (i.e., Gemini Earn) and institutional clients testing liquidity,” the document stated.

See Also: Sam Bankman-Fried A 'Psychopath,' Says Binance CEO Changpeng Zhao

“Genesis had been exploring all possible options amidst the liquidity crunch resulting from the FTX news,” a Genesis representative said.

“After reviewing a number of options, we made the difficult decision to temporarily suspend redemptions and new loan originations in the lending business so that we can identify the best solution and outcome possible for clients."

Related: Winklevoss Brothers-Owned Gemini Suffers $485M In Crypto Outflows As FTX Jitters Grow

The fall of Three Arrows Capital, a crypto hedge firm that filed for bankruptcy, inflicted damage to Genesis early this year. According to court records, Genesis lent Three Arrows $2.4 billion. Genesis' parent business, Digital Currency Group, has a $1.2 billion claim against the insolvent hedge fund.

To read about the latest FTX developments, check out Benzinga's FTX home page.

Photo: Unsplash

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: CryptocurrencyMarketsFTXGenesisLoan
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!