Genesis Owes Customers of Gemini Crypto Exchange $900 Million After FTX Collapse: Report

Crypto broker Genesis and its parent company Digital Currency Group (DCG) owe customers of the Winklevoss twins’ crypto exchange Gemini $900 million (roughly Rs. 7,350 crore), the Financial Times reported on Saturday.

Crypto exchange Gemini is trying to recover the funds after Genesis was wrongfooted by last month’s failure of Sam Bankman-Fried’s FTX crypto group, the newspaper said, citing people familiar with the matter.

Venture capital company Digital Currency Group, which owns Genesis Trading and cryptocurrency asset manager Grayscale, owes $575 million (roughly Rs. 4,700 crore) to Genesis’ crypto lending arm, Digital Currency Chief Executive Barry Silbert told shareholders last month.

Gemini, which runs a crypto lending product in partnership with Genesis, has now formed a creditors’ committee to recoup the funds from Genesis and its parent DCG, the report added.

Separately, Coindesk on Sunday reported that creditor groups in negotiation with Genesis currently account for $1.8 billion (roughly Rs. 15,000 crore) of loans, with that number likely to continue to grow.

A second group of Genesis creditors, with loans also amounting to $900 million (roughly Rs. 7,300 crore), is being represented by law firm Proskauer Rose, CoinDesk said citing a source.

Genesis and Gemini did not immediately respond to Reuters’ request for comment.

Genesis has hired investment bank Moelis & Company to explore options including a potential 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 crypto exchange FTX.

Crypto trading platform FTX filed for bankruptcy protection in the United States on November 11 in the highest-profile crypto blowup to date, after traders pulled billions from the platform in three days and rival exchange Binance abandoned a rescue deal.

© Thomson Reuters 2022