This article comes fromDecrypt, original author: Will McCurdy
Odaily Translator | Nian Yin Si Tang
Odaily Translator | Nian Yin Si TangThe Financial Times on Saturday cited an unnamed source as sayingreported that
, embattled cryptocurrency brokerage Genesis and its parent company, Digital Currency Group (DCG), owe Gemini Earn users $900 million.
Gemini used to use Genesis as the main lending partner for its high-yield Earn service, which allows customers to deposit cryptocurrencies in exchange for interest, similar to a bank account, offering returns of 0.45% to 8% depending on the type of token deposited.
According to the Financial Times, Gemini is sitting on a committee of creditors working to recover funds from Genesis and DCG.
The Gemini Earn service has experienced significant outages since the FTX crisis unfolded early last month.Gemini was founded in 2015 by brothers Cameron and Tyler Winklevoss. The exchange previously told users it would suspend Gemini Earn withdrawals on Nov. 16, but has yet to specify when it expects to reopen. The exchange willAttributed to
"Unprecedented market turmoil".Previously, Genesis was suspended for "unusual withdrawal requests" as FTX crashed on the same day.。
Redemptions and new loan originations to customers suspendedGenesis is reportedly working with investment bank Moelis & Co on a potential financing package. It was reported earlier this month that the lender hadTried to raise $1 billion
, to avoid the "liquidity crunch" that forced it to stop withdrawals.
It is reported that Genesis has at least $175 million in exposure to FTX through its derivatives trading business. Genesis then stated that it received a $140 million equity injection from DCG, which will be used to optimize Genesis' balance sheet and strengthen its position in the encryption market.All other Gemini services, including its exchange, Gemini credit cards, and Gemini staking, remain fully functional and functioning as of this writing. The exchange hasreassure users multiple times
, all funds held on its exchanges are backed 1:1.
Still, Gemini's complicated financial relationship with its parent company could complicate an already worrisome outlook for its creditors.
Separately, DCG owes Genesis $1.7 billion of the $2 billion in outstanding debt at press time, the report said. It should be noted that DCG is also the parent company of Grayscale.Ryan Selkis, founder of blockchain analytics company Messari"According to the analysis of public documents, the Grayscale Bitcoin Trust Fund GBTC is very likely to be held by the parent company DCG, but it is also reasonable that most of these collaterals are actually held by Genesis rather than DCG. DCG There are approximately $600-800 million in cryptocurrency collateral, most of which are GBTC and ETHE shares purchased in 2021 and early 2022; if these assets are indeed Genesis collateral, it means that DCG's net fund value has been reduced by 50%. This also means that in the next 2.5 years, Genesis will be forced to sell millions of GBTC shares every month to repay creditors, which will also hinder DCG from launching an ETF.”
also,also,According to the latest news from CoinDesk
Further debt is owed by a third group of creditors formed by Kirkland & Ellis on behalf of Celsius and Voyager Digital, whose amount is unknown. The Gemini client base is represented by the law firm of Latham & Watkins.
Genesis declined to comment for this story. Proskauer Rose, Latham & Watkins and Kirkland & Ellis did not respond to requests for comment by press time.
