Its been a bad month for many in the crypto world, including Gemini Exchange and its owners and founders, billionaire twin brothers Tyler Winklevoss and Cameron Winklevoss.
On November 16, 2022, Gemini announced on its blog: Genesis Global Capital, LLC (Genesis) the lending partner of the (Gemini) Earn program has paused withdrawals and will not be able to meet customer redemptions within the service-level agreement (SLA) of 5 business days.
The announcement came asGeminis lending partner, Genesis, locked up the exchange customers assets by pausing withdrawals. Gemini had $2.8 billion in total active loans at the end of Q3 2022.
In a recent letter to customers, Genesis CEO Derar Islim said the lending withdrawal freeze is likely to be sorted in a matter of weeks instead of days, as was originally stated.
The Financial Times recently reported that Genesis owes Gemini $900 million, and the exchange has formed a creditors committee to recoup the funds from Genesis.
Genesis has hired investment banking firm Moelis & Co to help explore all options, including bankruptcy. Itsparent group, Digital Currency Group (DCG) is one of the leading investment groups in crypto and was valued at $10 billion in 2021.
DCG reportedlyhas $2 billion in outstanding debt. Approximately $1.7 billion of that debt is owed to its subsidiary Genesis, based on debts it took on during the Three Arrows Capital collapse. Some of DCGs borrowing was used to fund investments in another subsidiary, Grayscale.
Cover image by Gerd Altmann from Pixabay.