Approximately $1.8 billion in loans are owed by customers whose money is locked up on Genesis, a trading and lending platform, and who have sought legal advice. This figure appears to be increasing.
According to the Financial Times, a group of customers who used cryptocurrency exchange Gemini's Earn program, which is linked to Genesis, were owed $900 million after Genesis' lending unit halted customer withdrawals on November 16.
On November 16, Genesis' crypto-lending unit suspended withdrawals, citing "unprecedented market turmoil." The firm also revealed it held $175 million in FTX trades.
Genesis owes another $900 million to a group of creditors represented by the law firm Proskauer Rose, in addition to the funds owed to Gemini users. Finally, a third group is collaborating with Kirkland & Ellis, the law firm that advised bankrupt cryptocurrency firms Celsius and Voyager Digital. However, the total amount owed to this group remains unknown.
The Proskauer group brings the total to $1.8 billion, with more to come from a third ad hoc group represented by Kirkland & Ellis, the law firm that represents bankrupt crypto firms Celsius Network and Voyager Digital, according to the second person. The total amount owed by this third group is unknown. The Gemini customers are also represented by the law firm Latham & Watkins.
Genesis stated in a letter to investors on November 23 that it had "begun discussions with potential investors as well as our largest creditors and borrowers, including Gemini and DCG [Digital Currency Group], to agree on a solution that shores up our lending business' overall liquidity and addresses clients' needs."
Bloomberg had earlier reported that the troubled company is currently in talks to raise at least $1 billion in new capital to keep its lending unit afloat.
Genesis also stated that it hired investment bank Moelis & Co to investigate all potential strategies to keep it out of insolvency proceedings. However, if Genesis' efforts to raise funds fail, bankruptcy remains an option.
"Our goal is to resolve the current lending situation without the need for any bankruptcy filing," a Genesis spokesperson told Bloomberg in a statement.
