Genesis, a branch of the Digital Currency Group (DCG), currently owes the Gemini cryptocurrency exchange $900 million. In addition, the latter had put its users’ withdrawals on hold last month due to lack of liquidity in the face of the large number of simultaneous withdrawals.
Gemini, next domino?
Genesisthe company on the brink of bankruptcy bearing the brunt of the ramifications of the FTX debacle, owes $900 million to cryptocurrency exchange Gemini as part of the “Gemini Earn” program of which it is a partner.
The information, revealed by the Financial Times, which cites “sources close to the case”, highlights the liquidity crises encountered by platforms offering returns to users (in this case up to 8% interest) in exchange for the immobilization of their cryptocurrencies, which are delegated in the form of a loan.
According to the sources cited, Gemini is behind the recently formed group of creditors aimed at parrying the bankruptcy of Genesis. Note that beyond the single case of Gemini, Genesis owes, in total, approximately $2.8 billion to its various creditors..
The consequences could be significant for Gemini if Genesis fails to recover, the exchange having also blocked withdrawals from its users last month as he did not have the cash to pay for them.
Additionally, the Financial Times revealed last week that a portion of the borrowings of Digital Currency Group (DCG), Genesis’ parent consortium, had been used to fund Grayscale’s borrowingsanother of its subsidiaries.
Grayscale, which, let us remember, holds 634,000 BTC under management, or the equivalent of approximately $10.8 billion at current prices. Moreover, despite doubts about its resilience, the company has refused to publish the addresses of its various wallets.
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Mishmash of debts
The creditors’ committee launched by Gemini is also struggling to save Digital Currency Group, the group which is suffering from the multiple difficulties of its branches. Founded in 2015, DCG is currently one of the largest investors in the cryptocurrency ecosystem.
Proof of its size, the DCG group was valued at 10 billion dollars last year by its various investors, including Singaporean sovereign wealth fund GICSoftBank as well as CapitalG, Google’s venture capital firm.
And yet, DCG will not be able to participate in the refloating of its Genesis branch. And for good reason, she herself owes him $1.7 billion through 2 loans still in progress. It should be noted, however, that of this sum, $1.1 billion is a direct consequence of an unpaid loan from the Three Arrows Capital (3AC) fund, which was declared insolvent a few months ago.
Barry Silbert, CEO of DCGhad nevertheless shared a note with the various investors of the group on November 23 in order to “reassure” them concerning the ambient noise:
“We have weathered previous crypto winters, and while this one may seem more severe, we will come out of it collectively stronger. »
👉 Read also – Crypto winter: Kraken lays off 30% of its staff
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Source: Financial Times
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Passionate about the world of decentralized finance and the novelties brought by Web 3.0, I write articles for Cryptoast to help make blockchain more accessible to everyone. Convinced that cryptocurrencies will change the future very soon.
Maximilien Prue
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