Crypto broker Genesis and its parent company, Digital Currency Group (DCG) owe $900 million to customers of the Winklevoss Gemini twins’ crypto exchange, the Financial Times reported on Saturday.
Cryptocurrency exchange Gemini is trying to recover money after Genesis fell victim to the failure of Sam Bankman-Fried’s crypto group FTX last month, the newspaper quoted people familiar with the matter as saying.
The venture capital firm Digital Currency Group, which owns Genesis Trading and crypto asset manager Grayscale, owes Genesis’ crypto lending arm $575 million, the firm’s CEO, Barry Silbert, told shareholders last month.
The report added that Gemini, which operates a crypto-lending product in partnership with Genesis, has now formed a committee of creditors to demand repayment from Genesis and its parent company, DCG. Separately,
Coindesk reported on Sunday that creditor groups negotiating with Genesis currently have $1.8 billion in loans, and that number is likely to grow.
Another group of Genesis creditors, also owed $900 million, is represented by the law firm Proskauer Rose, according to CoinDesk, citing a source.
The number of loans in this third group is unknown. In addition, the Gemini client group is represented by the law firm Latham & Watkins, another source said.
In a Nov. 23 letter to investors, Genesis said it “has begun discussions with potential investors and major creditors and borrowers, including Gemini and DCG [Digital Currency Group], to agree on a solution that will support our loan operations for total liquidity and satisfy customer needs.”
Genesis has hired investment bank Moelis and Company to explore options, including possible bankruptcy, the New York Times reported last month, citing three people familiar with the matter.
Genesis Global Capital suspended customer redemptions in its lending business last month, citing the sudden failure of cryptocurrency exchange FTX.
In November, the crypto trading system FTX filed for bankruptcy protection in the United States. In the 11th highest-profile crypto deal of the year, traders withdrew billions from the platform in three days, and rival exchange Binance pulled out of the bailout deal.
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