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Genesis Global Trading CEO Begs Clients For More Time

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Genesis Global Trading CEO Begs Clients For More Time
Genesis Global Trading CEO Begs Clients For More Time

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The interim CEO of troubled crypto lender and market maker Genesis, Derar Islim, has sent a letter to clients asking them for more time to resolve the company’s financial crisis. Genesis halted withdrawals in November in the wake of FTX’s collapse.

Genesis begs clients for more time

Islim sent this letter to clients on January 4, as seen in a report by Bloomberg. The letter comes a few days after Barry Silbert, the CEO of Genesis’ parent company Digital Currency Group engaged in a Twitter altercation with the co-founder of Gemini, Cameron Winklevoss, over the situation at Genesis.

Winklevoss criticized how Silbert handled the situation, noting that Gemini clients using the Gemini Earn product were affected by the halted withdrawals. Gemini is currently facing a lawsuit for halting the Gemini Earn product.

In the recent letter sent to clients, Winklevoss said that the company was committed to moving as fast as possible to resolve the matter. However, he added that it was “a very complex process that will take some additional time.”

Gemini’s Winklevoss had said that Genesis owed the exchange’s Earn product users $900 million. The Gemini CEO also gave Silbert a January 8 deadline to resolve the issue. Winklevoss said that the exchange had sent several proposals to Genesis on resolving the lender’s financial issues, but Genesis never acknowledged any of the proposals.

Genesis’s financial crisis stems from the lender’s funds being locked in its FTX account. On November 10, a day before FTX filed for Chapter 11 bankruptcy protection, Genesis revealed it had around $175 million in its FTX account but could not access the funds after FTX halted withdrawals. Genesis is considering restructuring.

On the other hand, the Gemini exchange is working with investment bank Houlihan Lokey to devise a plan to resolve the liquidity crisis that made Genesis unable to pay the $900 million that it owes to users of the Gemini Earn product.

Genesis owes over $1.8 billion to clients

Genesis now appears to owe clients more than $1.8 billion, and the figure could be even higher. Besides the $900 million owed to the Gemini Earn users, a report by CoinDesk noted that another group of Genesis clients to whom the lender owes another $900 million. The Proskauer Rose law firm is representing these creditors.

The amount owed to the Gemini clients and the Proskauer group takes the figure to $1.8 billion, and this is just the tip of the iceberg. Another third ad hoc group is also a Genesis creditor being represented by Kirkland & Ellis. Kirkland & Ellis is the same law firm representing Celsius and Voyager in their bankruptcy proceedings.

The amount Genesis owes to the third group is still unclear. Nevertheless, the figure is significantly high. On November 23, 2022, Genesis said it was working to come up with a solution in the coming weeks, with the lender saying bankruptcy was a possibility.


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