Troubled Crypto Firm Genesis Sought $1 Billion Emergency Loan Before Suspending Withdrawals – This is What Happened
The troubled crypto lending and trading firm Genesis had sought an emergency loan of $1bn before closing redemptions for clients earlier this week.
Details about the emergency loan sought by Genesis was shared by the Wall Street Journal on Thursday, with the newspaper citing a confidential fundraising document as saying that Genesis needed the 1$bn loan by 10 AM last Monday.
Per the WSJ report, Genesis admitted in the document that it was experiencing a “liquidity crunch due to certain illiquid assets on its balance sheet.” It added that the company faced an “ongoing run on deposits driven mainly by retail programs and partners of Genesis (i.e., Gemini Earn) and institutional clients testing liquidity.”
Genesis did not manage to secure the needed credit facility.
The report cited a spokesperson at Genesis as saying that the company explored “all possible options amidst the liquidity crunch resulting from the FTX news.”
“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,” the spokesperson added.
Genesis is a major crypto trading and lending firm owned by Barry Silbert’s crypto conglomerate Digital Currency Group (DCG). Among other things, many of the largest exchanges in the crypto industry work with Genesis on various ‘earn’ and crypto savings programs that pays out yields to users.
The US-based exchange Gemini is among the exchanges that relies on Genesis for its Earn program.
Earlier this week, Gemini’s trading platform went offline, causing some nervousness among users. But according to the exchange, the disruption was only due to a technical issue
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