A request for funding was never granted to the company.
Genesis, a crypto lending firm, reportedly asked investors for an emergency loan of $1 billion this week before suspending redemptions.
According to the fundraising document, Genesis needed access to the credit facility by 10 a.m. Monday due to illiquid assets on its balance sheet. However, Genesis did not receive the funds.
An emergency loan of $1 billion
Genesis’ spokeswoman further clarified that the document in question was prepared over the weekend following the collapse of FTX. However, it is no longer relevant. In addition, the report revealed that the company had “very positive conversations” with potential investors.
According to The WSJ’s review of the document,
“A run on deposits is ongoing, driven by retail programs and Genesis partners (such as Gemini Earn) as well as institutional clients testing liquidity.”
Potential investors had the option of owning a controlling stake in Genesis, one of Digital Currency Group’s subsidiaries, or a minority stake in the holding company. The brokerage firm is owned by DCC.
Due to the liquidity crunch precipitated by the FTX fallout, Genesis had also been exploring all possible avenues. According to the company’s spokeswoman, Genesis had to make the difficult decision to temporarily halt redemptions and new loan originations in the lending business in order to identify the best solution and outcome for the clients after reviewing several options.
Derar Islim, the firm’s interim CEO, stated that the lending arm, Genesis Global Capital, failed to meet all withdrawal requests. It also hired advisers to investigate all possible options. The unit caters to institutional clients.
Meanwhile, Genesis’s spot and derivatives trading and custody operations continue to operate normally.
Genesis’ problems began after the collapse of a once-famous crypto hedge fund, Three Arrows Capital (3AC), which declared bankruptcy this summer. According to reports, the company loaned $2.4 billion to 3AC. In addition, Digital Currency Group has a $1.2 billion claim against the insolvent hedge fund.