The cryptocurrency brokerage platform – Genesis – and its parent company Digital Currency Group (DCG), reportedly owe customers of Gemini approximately $900 million.
Genesis has been coping with severe issues ever since the crash of FTX. It suspended withdrawals in November while its creditors have been making desperate calls to prevent bankruptcy.
Almost $1 Billion in Debt
The recent collapse of one of the largest cryptocurrency exchanges (FTX) caused a huge disruption of multiple other companies that had even remote affiliations. One such example is Genesis, which had millions in locked funds in an FTX trading account.
According to a coverage by The Financial Times, the platform, which suspended users’ withdrawals at the end of November, owes $900 million to clients of the Winklevoss twins’ crypto exchange – Gemini. The two parties joined forces last year to provide consumers with up to 7.4% APY on their holdings.
Gemini has already set up a creditors’ committee whose goal will be to retrieve the funds. The group will discuss the matter with both Genesis and Digital Currency Group (the parent company led by Barry Silbert).
DCG has also been in a state of knockdown recently. It has $2 billion worth of outstanding debt, the majority of which is owed to its subsidiary Genesis through two loans. CEO Silber revealed last month another liability of $575 million to Genesis, due by May of 2023. Despite the problems, he is optimistic that DCG will endure the critical times:
“We have weathered previous crypto winters, and while this one may feel more severe, collectively, we will come out of it stronger.”
Trying to Stay Afloat
Genesis seems to be close to following the fate of multiple cryptocurrency firms that have already filed for bankruptcy protection, including FTX, Alameda Research, BlockFi, Three Arrows Capital, and Celsius.
As CryptoPotato recently reported, creditors of the troubled entity teamed up with restructuring lawyers to find a way out of the adverse situation. Prominent law companies, such as Proskauer Rose and Kirkland & Ellis, have already given their advice on the matter.
“Our goal is to resolve the current situation in the lending business without the need for any bankruptcy filing,” a Genesis spokesperson said at the time.
Genesis previously attempted to weather the storm by raising $1 billion from potential investors and was in talks with Binance regarding a financial injection. However, both options failed.