Gemini Exchange Seeks to Retrieve $900 Million from Crypto Lender Genesis
Cryptocurrency exchange Gemini is trying to recover the $900 million it had paid in loan to crypto broker Genesis and its parent company Digital Currency Group (DCG).
According to a Financial Times report, the Winklevoss twins' crypto exchange is seeking to retrieve the funds after Genesis was wrongfooted by last month’s failure of Sam Bankman-Fried’s FTX crypto platform.
Barry Silbert, founder of DCG, told shareholders in a letter last month that the company owes $575 million to Genesis Global Capital, the lending arm of Genesis. The loan, due in May 2023, was used to “fund investment opportunities” and repurchase stock from non-employee shareholders.
The loan was reportedly issued after Digital Currency Group took over Genesis’ exposure from the Three Arrows Capital default. Back in July, Genesis Global Trading CEO Michael Moro said bankrupt 3AC was the large counterparty that failed to meet a large margin call.
Subsequently, in a series of tweets, Genesis revealed that it has worked with Digital Currency Group to continue to isolate risk. “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,” Moro said at the time.
Gemini has now formed a creditors' committee in a bid to recoup the funds from Genesis and its parent DCG.
In the wake of FTX’s collapse, Genesis Global Trading announced that it is temporarily suspending redemptions and new loan originations. In a statement on Twitter, Genesis said the “abnormal withdrawal requests” have exceeded its “current liquidity.”
The company has also hired investment bank Moelis & Company to explore options including a potential bankruptcy, the New York Times reported last
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