Cryptocurrency lender Genesis was seeking a $1 billion emergency loan from investors before telling customers it was suspending withdrawals this week, reported the Wall Street Journal.
The newspaper claimed to have seen physical evidence of a confidential document in which the company expressed the need for this money based on a “liquidity crunch due to certain illiquid assets on its balance sheet.”
As we know, the funds never arrived.
“There is ongoing run on deposits driven mainly by retail programs and partners of Genesis (i.e., Gemini Earn) and institutional clients testing liquidity,” the document stated.
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“Genesis had been exploring all possible options amidst the liquidity crunch resulting from the FTX news,” a Genesis representative said.
“After reviewing a number of options, we made the difficult decision to temporarily suspend redemptions and new loan originations in the lending business so that we can identify the best solution and outcome possible for clients.”
Related: Winklevoss Brothers-Owned Gemini Suffers $485M In Crypto Outflows As FTX Jitters Grow
The fall of Three Arrows Capital, a crypto hedge firm that filed for bankruptcy, inflicted damage to Genesis early this year. According to court records, Genesis lent Three Arrows $2.4 billion. Genesis’ parent business, Digital Currency Group, has a $1.2 billion claim against the insolvent hedge fund.
To read about the latest FTX developments, check out Benzinga’s FTX home page.
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