Cryptocurrency lender Genesis sought an emergency loan of $1 billion from investors following the collapse and subsequent bankruptcy of FTX, but failed to obtain the requested funds. wall street journal Reported on November 17th.
The loan request came before the company sent notices to clients that it was suspending redemptions earlier this week.
The WSJ, citing documents it reviewed, noted that Genesis sought funding by Nov. 14 because of a “liquidity crisis due to certain illiquid assets on its balance sheet.”
The document reportedly described the “continued run of deposits driven primarily by retail programs and institutional investors testing liquidity with Genesis partners (i.e. Gemini Earn).” It is said that
A Genesis spokesperson said, journal The classified documents are no longer up to date, and the company said it was having “very positive conversations” with potential investors to restore liquidity.
Genesis announced on November 16 that its cryptocurrency lending unit has suspended all customer withdrawals.
3AC’s past troubles
The default of Three Arrows Capital (3AC) and the exposure of Genesis left the company facing hundreds of millions of dollars in losses from over-leveraged hedge funds.
Michael Moro, CEO of Digital Currency Group (DCG)-owned Genesis, issued a statement earlier this year in response to Genesis’ 3AC exposure.
“As we mentioned on June 17th, we mitigated losses with large counterparties who did not respond to margin calls to us. We have moved on, our business is operating as normal and serving all of our clients’ needs.”
Both the liquidity of Genesis and the duration profile of Genesis Global Capital, Genesis’ lender, were adversely affected.