Cryptocurrency exchange Gemini is trying to recover $900 million in loans it repaid to crypto broker Genesis and its parent company Digital Currency Group (DCG).
According to Financial Times report goodThe Winklevoss twins’ crypto exchange is seeking to recover funds after Genesis missteps following the failure of Sam Bankman-Fried’s FTX crypto platform last month.
DCG founder Barry Silbert, told the shareholders Last month, in a letter, it said the company owed $575 million to Genesis Global Capital, the lending arm of Genesis. The loan, due in May 2023, was used to “fund investment opportunities” and to repurchase stock from non-employee shareholders.
The loan was reportedly issued after Digital Currency Group took over Genesis’ exposure from Three Arrows Capital default. Back in July, Michael Morrow, CEO of Genesis Global Trading, said that bankrupt 3AC was the largest counterparty that failed to meet large margin calls.
later, in a series of tweets, Genesis revealed that it has partnered with Digital Currency Group to separate the risk. Morrow said at the time, “DCG has assumed some of the origination liabilities related to this counterparty to ensure that we have the capital to operate and grow our business over the long term.”
Gemini has now formed a creditors’ committee to recover money from Genesis and its parent DCG.
Is Genesis in trouble?
in view of The Fall of FTX, Genesis Global Trading announced that it was temporarily suspending redemptions and new loan originations. In a statement on twitterGenesis said that “unusual withdrawal requests” have exceeded its “current liquidity”.
The company has also hired investment bank Moelis & Company to explore options including possible bankruptcy, The New York Times informed of last month.
Furthermore, Grayscale, a subsidiary of Digital Currency Group (DCG), has refused to share its proof-of-reserve, citing “security concerns”. trick is fueled speculation About the financial health of the company.
Despite all the evidence pointing to problems at DCG, Silbert attempted to reassure investors in his letter last month, claiming most of its entities were “business as usual.” They even said that they are on pace to generate $800 million in revenue this year on the back of only $25 million raised in seed capital since inception.
“DCG will remain the industry’s leading developer and we remain committed to our long-term mission to accelerate the development of a better financial system. We have weathered the past crypto winter and while this may feel more severe, collectively we Will come out of this stronger,” he said at the time.
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