Genesis Sought $1B Bailout From Investors Before Halting Withdrawals: Report

InfoNesia.xyz – Crypto lender Genesis tried to raise a $1 billion loan from investors to avoid a “liquidity crunch” driven by the fallout from crypto exchange FTX’s collapse, according to a Wall Street Journal report.

According to a Genesis document seen by the WSJ, Genesis needed the credit by 10 am EST this past Monday, but didn’t get it.

On Wednesday morning, Genesis then announced it would suspend withdrawals from its lending arm, blaming FTX’s collapse for “abnormal withdrawal requests which have exceeded our current liquidity.”

“There is an 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.

A spokesperson for Genesis told Decrypt on Friday morning that Genesis “had been exploring 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 company tweeted that its trading and custody businesses remained “fully operational,” and that Genesis Global Trading, the broker-dealer that is registered with the SEC and holds Genesis’s virtual currency license, is “independently capitalized and operated.”

However, the lender also tweeted that its derivatives business had $175 million in locked funds on its FTX account, though it said this would not impact its market-making activities.

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Genesis is still reeling from the implosion of Three Arrows Capital (3AC) earlier this year, with the company saying the $2.3 billion owed by the ex-crypto hedge fund “negatively impacted” the liquidity of its lending arm.

Genesis joins FTX fallout

Genesis joins the growing list of crypto firms impacted by the demise of crypto exchange FTX earlier this month.

The company founded by crypto “winner” Sam Bankman-Fried filed for Chapter 11 bankruptcy last week, and reportedly owes money to over one million creditors, according to the filing.

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