Crypto Lender Genesis Had Sought Emergency Loan of $1 Billion From Investors
After taking the decision to temporarily suspend redemptions and new loan originations, it appears that Genesis sought an emergency loan of $1 billion from investors before telling clients it was suspending redemptions in the wake of the collapse of FTX.
The document viewed by the Wall Street Journal cites a “liquidity crunch due to certain illiquid assets on the balance sheet of Genesis”. However, the firm failed to get that funding.
“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 said, according to the paper.
“Genesis had been exploring all possible options amidst the liquidity crunch resulting from the FTX news,” the company said in an emailed statement to Reuters, adding that it took the decision to suspend redemptions after reviewing a number of options.
The implosion of FTX has rippled across the industry, hobbling liquidity at firms with exposure to what was once one of the world’s biggest crypto exchanges, and prompting investigations by regulators in several countries.
Last week, FTX filed for U.S. bankruptcy protection and its founder Sam Bankman-Fried resigned as chief executive, after rival exchange Binance walked away from a proposed acquisition.
