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Genesis Institutional Lending Platform Timeline: From Publicly Emphasizing Fund Safety to the Brink of Bankruptcy

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Genesis Institutional Lending Platform Timeline: From Publicly Emphasizing Fund Safety to the Brink of Bankruptcy

The lending platform Genesis emphasized no significant exposure on 11/9, only to announce the suspension of withdrawals on 11/16. According to financing documents obtained by foreign media, the funding gap has now reached hundreds of millions of dollars.

Note: Digital Currency Group, DCG, under which subsidiaries include media outlet CoinDesk, mining firm Foundry, lending platform Genesis, and trust fund issuer Grayscale.

11/16 | Genesis Suspends Withdrawals

Genesis initially clarified on Twitter on 11/9 that they did not have significant exposure positions, nor did they hold any exchange platform tokens. They claimed that their experienced trading and risk management team has been continuously evaluating credit risks, volatility, and liquidity in the market.

However, it wasn't until the evening of 11/16 that Genesis announced the suspension of withdrawals due to the FTX incident.

Genesis stated that the default of 3AC has negatively impacted their liquidity, and the FTX incident has caused withdrawal demands to exceed the platform's liquidity. After consulting professional and legal teams, they decided to temporarily suspend the redemption and application functions of their lending business.

In fact, Genesis had already been affected back in June for providing loans of up to $2.36 billion to 3AC. After 3AC declared bankruptcy and entered into judicial proceedings, legal documents showed that Genesis claimed $1.2 billion from 3AC.

11/16 | Chain Reaction Occurs, GBTC Discount Reaches Record High

Following Genesis' withdrawal suspension, Binance, Huobi, OKX, and Tether all emphasized that they had no business dealings with Genesis.

However, this has led to Gemini's revenue product "Gemini Earn" suspending withdrawals, as one of their partners is Genesis.

Additionally, Grayscale Investments, also under DCG, chose not to disclose reserve proof for flagship products like GBTC amid market panic, indirectly exacerbating concerns in various sectors about DCG and Genesis being unable to meet their obligations.

11/17 | Seeking a $1 Billion Loan

The Wall Street Journal claimed to have fundraising documents revealing that Genesis is releasing equity to seek a $1 billion emergency loan. The reason is the presence of some illiquid assets on the balance sheet, leading to a cash crunch.

A spokesperson for Genesis stated:

This is not the latest document; Genesis is actively in discussions with potential investors. In the situation of liquidity tightening due to the FTX incident, Genesis has been exploring all possible options.

Furthermore, The Block claimed that sources have confirmed that Genesis' fundraising target has been reduced from $1 billion to $500 million.

11/22 | Genesis Denies Bankruptcy Rumors, Negotiations with Binance at an Impasse

Bloomberg cited sources stating that Genesis has informed potential investors that they will apply for bankruptcy if the financing fails.

Potential investors include Binance and private equity giant Apollo Global Management. However, The Wall Street Journal reported that Binance, concerned about potential business conflicts with Genesis, has decided not to invest.

Representatives from Binance declined to comment on the matter. A representative from Genesis also responded to Bloomberg:

We do not have immediate plans to apply for bankruptcy. Genesis continues to engage in constructive discussions with creditors and is committed to resolving the situation without filing for bankruptcy.