Crypto exchange Gemini revealed working closely with Genesis Trading and its parent company Digital Currency Group, Inc, to find a solution for Earn users to redeem their funds.
In a series of tweets, the Winklevoss-led platform noted that it is working to provide a material informational update soon.
“This remains our highest priority and we understand Genesis and DCG remain committed to exploring every possible option to fulfill their obligations to Earn users.”
Gemini assured that the turmoil had not impacted any other products and services on its platform and that rest of its operations are working normally.
The on-chain activity revealed that Genesis had significant interactions with Alameda, Gemini, and BlockFi via their OTC trading desk. FTT was also a top token received and sent in those transactions. However, Genesis is yet to share more information to bring clarity on the extent of the exposure and capital required to make customers whole.
Due to the exposure to the bankrupt FTX and its sister trading firm, Alameda, Genesis Trading – touted as the backbone infrastructure of the institutional investor base for the crypto market – is now scrambling for more liquidity injection. Genesis and its subsidiaries are owned by Barry Silbert’s Digital Currency Group (DCG). Reports suggest it had around $175 million locked in a trading account with FTX.
CryptoPotato reported earlier that the platform sought a $1 billion emergency loan from its investors. But it failed to score the funding, which prompted its decision to suspend withdrawals from its lending arm, citing “abnormal withdrawal requests which have exceeded its current liquidity” on November 16. To keep operations running smoothly, its parent firm, Digital Currency Group, initially poured in $140 million.
In response to Genesis suspending withdrawals, Gemini halted withdrawals from its Earn product, in which the former is a lending partner.
Genesis is now looking to raise more fresh funding for its lending unit from potential investors. However, a failure to do so may push the company to file for bankruptcy, according to a new report. Despite this, a representative of for Genesis told Bloomberg that it has no plans to file for bankruptcy imminently and went on to add,
“Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”
Genesis reportedly approached Binance for an investment as well as private equity giant Apollo Global Management for support. The CZ-led crypto exchange, however, has turned down the request.