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Gemini Exodus Begins as Genesis Liquidity Woes Deepen

2 mins
Updated by Kyle Baird
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In Brief

  • Genesis cited a liquidity crunch due to illiquid assets
  • The crypto made loans with Alameda and 3AC
  • Jittery exchange users have been pulling assets from Gemini
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Embattled crypto lender Genesis was reportedly seeking a bailout before it suspended withdrawals this week.

Genesis Global Capital has become one of the latest victims of the FTX collapse and crypto contagion. The lending platform suspended withdrawals on the platform on Nov. 16, as reported by BeInCrypto.

On Nov. 18, the WSJ revealed that the company had sought a $1 billion loan before the trade suspension. The outlet cited a “confidential fundraising document” that it had access to.

According to the document, Genesis cited a “liquidity crunch due to certain illiquid assets on its balance sheet,” for a loan it wanted by Monday. According to the document:

“There is ongoing run on deposits driven mainly by retail programs and partners of Genesis (i.e., Gemini Earn) and institutional clients testing liquidity,”

Gemini Earn is a yield-bearing product offered by the Winklevoss twins’ Gemini exchange. According to Bloomberg, Gemini Earn has around $700 million in customer funds.

Genesis Liquidity Woes Deepen

A Genesis spokesperson told the WSJ that the document is dated, and there is positive momentum in shoring up liquidity. “Genesis had been exploring all possible options amidst the liquidity crunch resulting from the FTX news,” she said.

Genesis has outstanding loans with Alameda. Furthermore, it used the FTX native token FTT as collateral. FTT has dumped a whopping 93.6% over the past fortnight rendering the token and any outstanding collateral practically worthless.

Genesis also had toxic loans with the now-bankrupt crypto hedge fund Three Arrows Capital. Genesis had lent 3AC $2.4 billion, and its parent company Digital Currency Group has a $1.2 billion claim against the firm.

Furthermore, DCG subsidiaries include crypto asset manager Grayscale and BTC mining firm Foundry. Grayscale’s GBTC fund has seen its premium drop to -40% this month.

According to crypto YouTuber Lark Davis, Genesis was the industry’s biggest Bitcoin OTC desk and lender:

Gemini Exodus Begins

The fallout of the FTX collapse has yet to be fully realized and could be far-reaching. Fearing another bank run, Gemini tweeted that customer funds were fully backed on Nov. 17.

“All customer funds held on the Gemini exchange are held 1:1 and available for withdrawal at any time.”

However, it seems like rattled crypto investors have already started withdrawing. CryptoQuant founder Ki Young Ju reported a surge in Ethereum withdrawals from the exchange yesterday.

Additionally, Nansen reported that Gemini saw $570 million in withdrawals on Nov. 17.

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Martin Young
Martin Young is a seasoned cryptocurrency journalist and editor with over 7 years of experience covering the latest news and trends in the digital asset space. He is passionate about making complex blockchain, fintech, and macroeconomics concepts understandable for mainstream audiences.   Martin has been featured in top finance, technology, and crypto publications including BeInCrypto, CoinTelegraph, NewsBTC, FX Empire, and Asia Times. His articles provide an in-depth analysis of...