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Gemini Trust Company, a digital exchange platform that permits users to trade cryptocurrencies said it is making attempts to recoup the $900 million loan it made to cryptocurrency broker Genesis and its parent company, Digital Currency Group (DCG).
A report from the Financial Times revealed that Gemini’s attempt to recoup the funds highlights how the crypto lending market sits at the heart of the industry’s credit crunch following the collapse of the bankrupt FTX exchange.
The report also claimed that Gemini has now established a creditors’ committee to recover the money from Genesis and its parent DCG.
According to TheCoinRise, the Genesis balance sheet shows that there are $2.8 million in outstanding loans. DCG’s Founder, Barry Silbert wrote a letter to its investors following pressure from them to confirm the financial situation of his firm.
In the letter, Silbert confirmed that DCG had borrowed funds from Genesis Global Capital and other crypto investment firms for business purposes. He added that the loans collected were priced at market interest rates.
According to reports, the loan was given out after Genesis’ risk from the Three Arrows Capital default was assumed by DCG. Back in July, Genesis Global Trading CEO Michael Moro claimed that 3AC, a big counterparty, had defaulted on a sizable margin call due to bankruptcy.
Genesis in the Ongoing Financial Crisis
Genesis Global Trading announced that it was putting a halt to lending withdrawals following the collapse of the FTX exchange. According to the business, the number of withdrawals was excessive for its present cash flow.
The notice also mentioned that the business is looking for new sources of funding and alternative solutions to deal with its current predicament.
In addition, Gemini addressed how the actions of its lending partner, Genesis affected its loan program, Gemini Earn. The Gemini team said it would continue to work with Genesis on behalf of its Earn customers even though they are disappointed that the Earn program Service Level Agreement (SLA) will not be met.
Genesis, on the other hand, has stated that it has no intention of declaring bankruptcy just days after halting customer withdrawals.
The post Gemini Exchange is Seeking to Recover its Funds from Genesis appeared first on Blockchain, Crypto and Stock News.
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