Genesis stated that it would take several weeks to map out a recovery strategy for its lending business.
Genesis, a cryptocurrency lending platform, has informed its customers that its withdrawal freeze will likely last “additional weeks” as it attempts to avoid bankruptcy.
In a letter to customers shared by Genesis to Cointelegraph on December 7, interim CEO Derar Islim who took the temporary helm of the company in August — stated that it will take weeks to formulate a recovery plan that could result in withdrawals being reopened, stating:
“At this point, we anticipate that arriving at a path forward will take weeks rather than days.”
Genesis is also “working in consultation with highly experienced advisors” and is “evaluating the most effective path to preserve client assets, strengthen our liquidity, and ultimately move our business forward,” according to the letter.
“All other Genesis entities remain fully operational,” according to the letter.
In a Nov. 10 Twitter thread, Genesis Trading, the market maker and lending subsidiary of Digital Currency Group (DCG), revealed that it had $175 million in funds locked on the FTX crypto exchange.
That same day, DCG attempted to bail out Genesis with a $140 million cash infusion.
However, this did not appear to be sufficient to resolve its liquidity issues, as Genesis Global Capital froze withdrawals on Nov. 16 citing “unprecedented market turmoil” caused by FTX’s collapse, which resulted in “abnormal” withdrawal levels that exceeded its liquidity.
On November 21, the crypto lender denied plans to declare bankruptcy “immediately” after failing to cover a reported $1 billion shortfall on its balance sheet.
On November 22, Genesis confirmed that it had hired investment bank Moelis & Co for restructuring services in order to avoid Chapter 11.
Genesis reaffirmed in the letter that it is “committed to being as transparent as possible” to those affected and that customers will be notified of “significant developments, including any updates on timing.”
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